Assessing the Cold's Damage

Better, but still bad. That was the economic picture last week as moderating temperatures eased energy shortages and allowed most factories in the frozen East and Midwest to resume at least partial operation. Perhaps a third of the 1.8 million employees who had been idled by cold-related shutdowns went back to their jobs. But some workers, such as the more than 3,000 watermen who harvest oysters in Maryland's still iced-over Chesapeake Bay, may have to wait longer to resume earning money, and industries in the Pacific Northwest, confronting a drought that is undermining hydroelectric generating capacity, face power cuts of up to 25%.

The nation's gas companies, helped by cutbacks in industrial use, managed for the most part to avoid serious disruption of residential service. Utilities reported gratifying householder response to appeals from President Carter to dial down thermostats. In Chicago's North Shore residential area, consumption fell by as much as 15%. Nonetheless, hard-pressed utilities shopped far afield for additional supplies. A representative of Columbia Gas Transmission Corp., one of the nation's largest pipeline companies, prowled corporate corridors in Houston cornering utility men and offering to swap heating oil for Texas natural gas. A consortium of New York State power companies arranged for an extra 50 million cu. ft. of gas from Canada and another 50 million cu. ft. from California.

Now that a thaw is in sight, economists can begin to measure the impact of the unforeseen cold on the economic recovery. The verdict of TIME'S Board of Economists: a sharp, but strictly temporary, setback.

Forecaster Otto Eckstein reckons the damage--in higher imports of oil, gas and food, higher prices for domestically produced fuel, fruits and vegetables, and lost wages--at about $6 billion. Meaning: consumers' ability to buy things other than food and fuel will be reduced by that much. The figure, though lower than some other experts are calculating, is scarcely minor: it equals more than half of the $11.4 billion that President Carter proposes to pass out in tax rebates this spring.

But many board members thought the losses, especially in wages, would be quickly made up as plants go on overtime to catch up on lost output. Several likened the impact of the cold to the effect of a prolonged strike in a basic industry; by the fourth quarter, they believe, the economy will be about where it would have been if this winter had been normal. So far as jobs and production are concerned, that is; the inflationary impact will be longer-lasting. IBM Vice President David Grove now expects a 6.4% rise in consumer prices this year, v. the 5.8% he had forecast before the cold struck.

Some job losses due to natural-gas shortages, warn experts, will continue through the spring because some communities have burned in February natural gas designated for April delivery. Diversion of refinery runs from jet fuel to heating oil threatened disruptions in airline flight schedules.

Help is on the way for some people. At week's end an emergency bill authorizing $300 million in federal aid to low-and middle-income families hit by huge fuel bills was awaiting congressional approval. Utilities in New York and New Jersey may soon offer rebates to their customers. Many homeowners, however, have already earmarked any extra cash--for flood insurance that they think they will need when the snows melt. Last week insurers, accustomed to a mere trickle of inquiries, were receiving thousands of policy applications a day.

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