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But storm stores up strong rebound recovery in Q2.
The U.S. economy is likely to suffer a meaningful near-term setback as Winter Storm Fern delivers a sizeable drag on first-quarter growth, according to new analysis from Bank of America.
Economists at BofA estimate the storm could shave between 0.5 and 1.5 percentage points off annualised GDP growth in the first quarter, based on historical comparisons with previous nationwide weather disruptions.
To assess the potential impact, the bank looks back to Winter Storm Viola, which struck in February 2021 and placed roughly half of the country under winter weather advisories.
? Consumer spending fell 0.9% month-on-month during that episode, following a 1.3% increase in January, highlighting the abrupt demand shock associated with severe weather.
Using Bank of America aggregated credit and debit card data, economists found that spending declined 3.7% year-on-year during the peak week of the storm, compared with growth of around 6% in the weeks prior.
After accounting for a partial rebound in activity once conditions improved, the bank estimates that at least 0.6 percentage points of spending were lost over a one-month period due to Viola, equivalent to around a 0.5 percentage point drag on quarterly GDP growth.
The overall hit to economic output may have been larger once cash transactions and other GDP components were taken into account, leading Bank of America to conclude that the total impact on growth may have reached as much as 1.5 percentage points during that quarter.
? Applying this framework to current conditions, Aditya Bhave, U.S. economist at BofA Securities, said, "our initial estimate is that the drag on 1Q 2026 growth will be in the range of 0.5-1.5pp".
The bank cautions that the comparison is not exact, noting that while Viola caused severe damage in the southern U.S. and prolonged power outages in Texas, Fern has delivered heavier snowfall in the Northeast, where higher-income households are more concentrated.
That regional mix leaves uncertainty over whether the net economic damage from Fern will prove larger or smaller than the 2021 storm, even if nationwide disruption appears broadly similar.
? Despite the near-term hit, Bank of America does not expect the storm to derail the broader economic trajectory.
Some output is likely to be permanently lost, but the bank argues that lost activity should be partially recouped in the second quarter as conditions normalise.
"This means there is as much upside to 2Q GDP growth as there is downside to 1Q," Bhave said, adding, "we remain bullish".