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Economy

Crazy weather disrupting economic activity worldwide

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Record flooding has hit the U.K.   © Reuters

LONDON -- A merciless cold snap gripping the U.S., blizzards burying Japan, record rainfall inundating the U.K., and droughts searing South America. Abnormal weather patterns are wreaking havoc across the world, and while the impact on production is still limited, nature's fury is beginning to take a toll on global economic activity. Some regions are experiencing a drop in consumer spending and sluggish car sales, and global prices are rising for commodities such as coffee beans.

     The U.K. is being drenched. Not since 1766 has the southern part of the nation seen so much rain in January, and the wet weather continues. The upper part of the Thames River is flooding and the damage is widening. And with rail lines submerged, the distribution of goods has stalled in some parts.

     Normally hot Thailand is locked in a cold front that claimed more than 60 lives through the end of January. With temperatures dipping to 10 C in the northern and northeastern parts of the country, the government has begun distributing free blankets to a population ill equipped to fend off the cold.

     Another icy front swept across much of the U.S. this week, forcing some government agencies to shut down in Washington. Many retailers were also forced to close.

     The dollar was sold Thursday in New York foreign exchange trading on reports that U.S. retail sales declined 0.4% in January instead of moving sideways as expected, sparking concerns that the cold weather is destabilizing U.S. business conditions.

     Toyota Motor was forced to temporarily halt U.S. Camry production in early January because it could not get parts due to the cold weather. The automaker later made up the difference, but its January new-car sales were down 7.2% from the previous month. General Motors witnessed a double-digit drop in sales, and the U.S. auto market as a whole posted its first year-on-year sales decline in four months.

     "Customer traffic to showrooms has plunged," said the executive for U.S. sales at a leading Japanese automaker.

     While some countries are being slammed by rain and cold, the southern hemisphere is sweltering in a heat wave.

     In Australia, droughts have ignited wildfires. In Brazil, which produces some 40% of the world's coffee beans, hot, dry conditions are threatening the current crop, raising concerns that the harvest could be in jeopardy. As a result, coffee bean prices have jumped 20% since the start of the month in the New York futures market. Corn production in Argentina may also wither in the heat.

     Japan, meanwhile, is dealing with more than its share of heavy snow. The wintry weather is delaying harvests and sending wholesale vegetable prices skyward. Prices for negi (Japanese scallions) have surged nearly 70% from a week ago, and cucumbers and komatsuna (Japanese mustard spinach) have climbed some 10-20%.

     What is triggering nature's wrath? One explanation is that the prevailing, middle-latitude winds known as the westerlies have been meandering far afield, ushering in all sorts of crazy weather patterns. The so-called blocking highs have been uncommonly strong, shutting out the westerlies and forcing them significantly southward in East Asia and in America's East and Midwest, allowing in the deep freeze. At the same time, warm weather, and with it rain, is being channeled into such places as northern Europe. Japan's cold spell is also due to a similar phenomena.

     Ocean temperatures in the tropical Pacific are also affecting the weather. The waters are warmer than average around the Philippines and other parts of the western Pacific, and colder than normal eastward off South America, creating conditions resembling a La Nina event. Rising air from warm ocean regions pushes up the westerlies and causes them to meander. It also affects the distribution of high and low pressure systems in the Northern Hemisphere, allowing cold air to move southward and warm air to move northward.

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