The unusually warm January weather in the Northeast has led to outliers in economic data, most notably the best January in housing starts since 1973.

On the surface, a torrid pace of housing starts seems to be a good thing for the economy, but in this case it appears that the weather has skewed the data from home heating (way down) to retail (way up, especially in building materials.) After December's very disappointing figures, January's numbers may not add up to an increase in demand for this year, but merely a shift in timing.

The Washington Post reports:

But all that good news could have a downside. Good weather generally doesn't result in new houses being built or additional money being spent; it merely shifts around when those houses are started or when that spending occurs. For example, because Bozzuto began work on those Baltimore County townhouses in January instead of March, there will be that many fewer housing starts in March.

"An unusually warm January borrows some housing activity from future months," said Bill Cheney, chief economist of John Hancock Financial Services Inc., suggesting that February and March housing data could look weak in comparison. That said, he and most economists believe that there genuinely is a healthy economic expansion underway -- just one that is less explosive than economic data of the past week would suggest.

There is also a chance that the weather worsens from here and that cold times could delay new houses, postpone shopping trips and raise fuel bills. In construction, at least, Bozzuto said he has just enjoyed the favorable turn of events.

Tags: housing starts economy weather demand