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Balmy winter brings plenty of economic surprises

By Jonathan Fahey

Associated Press

Published: Friday, Jan. 13 2012 2:56 p.m. MST

Hooded fleece jackets are on sale at Who.A.U, Thursday, Jan. 12, 2012 in New York. Stores are supposed to be in the throes of clearing out cold weather items like coats and wooly sweaters to make room for spring receipts. Instead, unusually mild temperatures across a broad swath of the country has left them with mounds of winter merchandise they're trying to get rid of at rock bottom prices, a move that's taking a toll on profits.

Mark Lennihan, Associated Press

NEW YORK — Out of a relatively balmy winter have sprung some economic surprises. People have more cash in their pockets because they aren't turning up the thermostat. Airlines don't have to de-ice planes or battle blizzards. And shoppers are finding great deals on coats and boots.

But there are also disappointments. Merchants are stuck with unsold shovels and snow blowers. Drugstores say customers aren't buying cold medicine or getting as many flu shots.

The weather has been so mild that at some hardware outlets, rakes are flying off the shelf, and grass seed is outselling ice-melting salt.

"I haven't seen this mix of sales since I can remember," said David Ziegler, whose family owns nine Ace Hardware stores in the northwest Chicago area. "They're buying rakes ... just because it's warmer and people are not holed up."

This winter has been remarkably tame, especially in regions accustomed to a three-month tussle with freezing temperatures, snow, sleet and ice. In the Northeast, only four Decembers in the last 117 years have been warmer, according to the National Weather Service.

The weather feels especially gentle after two straight seasons of bitter cold and heavy snow. And it will take much more than Friday's relatively moderate snowstorm in the Midwest and Northeast to change that.

For Rocco A. Guadagna, it's been a lazy winter. He owns a lawn care and snow-removal company in Buffalo, N.Y. Because he charges an upfront fee for an entire season of plowing, he's getting paid even though he's hardly had to do any work.

Last year, his plows went out 42 times, more than usual. This year, he went out Friday for just the second time. But he doesn't think customers mind paying for something they barely use.

"Ninety percent, when they pay me, they say 'I hope I never see you,'" he said.

He's not the only one saving money. The weather and low natural gas prices have combined to push down home heating costs for the 51 percent of American households that use gas.

A typical bill this winter will be $700, a 3 percent drop from last year and the fourth straight year of declines, according to Mark Wolfe, executive director of the National Energy Assistance Director's Association.

Jim Cusick, a state employee in St. Paul, has been able to run his radiators less and catch up on an out-of-control home heating bill aggravated by the big, drafty old house where he lives with five of his six kids.

Because of last winter, Cusick said, he owed his utility more than $3,000 in back payments. As of this month, he said, his negative balance is down to $650.

"It's a bummer for the kids. They miss the skating and stuff," Cusick said. "But if winter stays mild, life will be better."

Airlines are enjoying savings, too. During storms, they often lose money because of refunds, delays and added costs for labor and expensive de-icing fluid.

United Continental Holdings Inc., the world's largest airline, said December snowstorms in 2010 hurt its fourth-quarter profit by $10 million and wiped out $25 million in revenue from fares and fees.

Not this season though. There were about 7,000 flight cancelations in the U.S. in December, down from 29,000 the year before, according to FlightStats. On-time performance improved to 79 percent, from 66 percent the year before.

The weather is a mixed bag for stores that offer outdoor gear. Henry Carter, co-owner of 9th Street Cycles, a bike store in Brooklyn, N.Y., said sales of winter equipment have been slow, but bike sales have been surprisingly brisk. And customers are riding more. So instead of the occasional cleaning or adjustment, the repair shop is busy will full tuneups.

"That's usually the stuff of summertime," he said.

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