India’s credit rating may be raised from junk if Finance Minister Pranab Mukherjee provides a comprehensive plan to roll back fiscal stimulus and cut the budget deficit this week, Moody’s Investors Service said.
“If we think the exit path is well articulated and well executed, the local currency rating could be upgraded,” Aninda Mitra, a Singapore-based sovereign analyst at Moody’s, said in a telephone interview on Feb. 19. India’s long-term local currency debt is placed at Ba2 by Moody’s, two levels below the investment grade and at par with Armenia and Turkey.
Mukherjee has an opportunity to narrow the budget shortfall as accelerating economic growth boosts tax revenue and a stronger political mandate after last year’s elections paves the way to resume asset sales. Rating changes have less impact on India than other countries like Greece, which borrow more from abroad. India’s foreign borrowings make up only about 4 percent of government debt compared with 83 percent for Greece, according to Citigroup Inc.
Stocks, Bonds Gain
“India has lived with a budget deficit for so long, and with a high growth rate you can run a deficit,” said Andrew Michael Spence, a Nobel prize-winning economist and professor emeritus at Stanford University’s Graduate School of Business. “You don’t want the credit rating to go too low. It’s more signaling rather than anything else.”
India’s budget deficit may narrow to 5.5 percent of gross domestic product in the financial year starting April 1 from 6.8 percent of GDP in the previous year, Chakravarthy Rangarajan, Prime Minister Manmohan Singh’s top economic adviser, said on Feb. 19. Mukherjee is scheduled to unveil the budget in parliament in New Delhi on Feb. 26 at 11 a.m.
Stocks snapped a two-day decline while the yield on India’s benchmark 10-year note fell the most in more than four weeks after Moody’s comment. The rupee gained the most since Feb. 15.
India’s Sensitive Index rose 1.1 percent to 16,369 on the Bombay Stock Exchange and the rupee appreciated 0.3 percent to 46.14 per dollar. Bond yields fell four basis points to 7.84 percent as of 1:24 p.m. in Mumbai.
Indian government debt accounts for about 80 percent of the gross domestic product. Standard & Poor’s and Fitch Ratings have a BBB-, the lowest investment grade rating, on Indian local currency debt.
Positive Outlook
“Although the debt level is high relative to other emerging markets, the fact remains that it’s not increasing sharply,” Mitra said. “It’s hovering around 80 percent of the GDP. So, that’s a reasonably good outcome and which is why we shifted towards the positive outlook,” in December 2009.
Mukherjee, who allowed the budget deficit to widen to provide fiscal stimulus to the economy amid a global recession, is relying on asset sales and faster growth to spur tax collections in next year’s budget.
India’s $1.2 trillion economy may grow 7.2 percent in the current fiscal year through March, accelerating for the first time since 2007, the statistics office said Feb. 8.
Singh’s government plans to reduce stakes in 68 companies including NMDC Ltd., the nation’s largest iron-ore producer, and NTPC Ltd., the biggest electricity provider, after he returned to power in May without the help of communist parties, who as part of the previous coalition had opposed the policy.
Inflation Risk
The government may borrow a net 3.8 trillion rupees in the year starting April 1, compared with 3.97 trillion rupees this year, said Abheek Barua, an economist at the Mumbai-based HDFC Bank Ltd.
Central bank Governor Duvvuri Subbarao last month urged the finance ministry to cut borrowings to support the monetary policy’s goal to contain inflation. Subbarao raised the proportion of deposits lenders need to maintain as cash reserves to 5.75 percent from 5 percent and said monetary policy alone won’t be effective in curbing price-gains unless Mukherjee rolls back fiscal stimulus.
“The growth has rebounded and at the same time there is a risk of inflation,” Mitra said. “Inflation expectations need to be anchored better, either through higher policy rates or if that process could be helped by lower government borrowing and spending.”
India’s inflation accelerated to 8.56 percent in January, the most in 15 months.
“India in on the cusp of a new tryst, which is fiscal destiny, and I hope they will take it,” Mitra said.
Get instant health insurance quotes, compare medical insurance plans, and find affordable health insurance to fit your health care coverage needs.
Germany’s Axel Weber leads the race to succeed Jean-Claude Trichet as president of the European Central Bank and Portugal’s Vitor Constancio is likely to be his deputy, a survey of economists shows.
Of 27 economists in the Bloomberg News survey, 24 said Weber will be chosen to replace Trichet, whose term ends on Oct. 31 next year. Only three picked Italy’s Mario Draghi, Weber’s main rival for the job. Twenty economists said Constancio will succeed Lucas Papademos as vice president when his term expires on May 31 this year. Euro-region finance ministers are due to vote on the vice president post today.
Jockeying for the ECB presidency has already started as governments across the 16-nation euro region grapple with a fiscal crisis that has prompted investors to question the sustainability of the monetary union. Installing Weber at the ECB’s helm next year would give Europe an outspoken inflation fighter who has stressed the need for fiscal discipline to protect the euro.
“Weber has a very strong personality and will definitely give the euro a very powerful and visible face,” said Laurent Bilke, a former ECB economist now at Nomura International Plc in London, who expects Bundesbank President Weber to win. “He’s a recognized economist and will make a difference. Under him, the ECB may even grow in its international stature.”
Weber’s Influence
Weber, 52, has sped to the top of European policy making. Like Federal Reserve Chairman Ben S. Bernanke, he is a former academic. He joined the Bundesbank as president from the University of Cologne in 2004 after a scandal over hotel expenses forced predecessor Ernst Welteke to resign.
Weber quickly established himself as one of the most influential of the ECB’s 22 Governing Council members, often pre-empting policy shifts and moving currency and bond markets with his comments.
He landed on Trichet’s so-called “Black List” last November by revealing the ECB would tighten its lending to banks. The remarks breached ECB protocol that major announcements be made by the president and also came within a week of a council meeting, when officials are supposed to refrain from commenting on policy.
Weber is perceived by economists as one of the ECB’s toughest inflation-fighting “hawks” because of the emphasis he places on curbing risks to price stability.
Hawks and Doves
If Constancio wins the ECB vice presidency, he would strengthen Weber’s chances by lending balance to his ticket. Constancio, Portugal’s central bank chief, is known as a “dove” who pays more attention to economic growth. Between them they would also ensure representation from northern and southern Europe at the top of the ECB.
Luxembourg’s Yves Mersch and Belgium’s Peter Praet are also on the ballot for the vice presidency business cards design. If finance ministers pick Mersch, who like Weber has a reputation as an inflation hawk, Draghi’s chances of replacing Trichet would rise.
Draghi, 62, left Goldman Sachs Group Inc. to become governor of the Italian central bank in January 2006. He replaced Antonio Fazio, who resigned after a criminal investigation was opened into his handling of Italian bank mergers. A former economics professor like Weber, Draghi chairs the Financial Stability Board and has pushed for limits on bankers’ pay and stronger capital requirements.
A spokesman for Italian Prime Minister Silvio Berlusconi said last week that the government backs Draghi for the ECB job.
‘Neck and Neck’
German Chancellor Angela Merkel has won French President Nicolas Sarkozy’s support for Weber’s candidacy, German magazines Spiegel and WirtschaftsWoche reported this month.
“It will be a neck-and-neck race,” said Holger Sandte, chief European economist at WestLB Equity Markets in Dusseldorf, who expects Draghi to win. “Policy makers probably want someone who’s a bit more diplomatic than Weber,” he said, adding the ECB “resides in Frankfurt and it’s pretty much designed in a German way.”
Germany, Europe’s largest economy, hasn’t held a major European policy position since Walter Hallstein led the Commission of the European Economic Community from 1958 to 1967. It didn’t put up a candidate when the ECB’s first president was picked in 1998, pushing instead for Wim Duisenberg of the Netherlands in exchange for the ECB being headquartered in Frankfurt, Germany’s financial capital.
The decision on Trichet’s successor “ultimately comes down to politics,” said Nick Matthews, senior economist at Royal Bank of Scotland Group Plc in London, who believes Weber will prevail. “I would imagine the argument that ‘it’s Germany’s turn’ is being used in the discussion.”
Musical Chairs
Whoever takes over from Trichet, the ECB’s six-member Executive Board may need to be reconfigured to ensure one country doesn’t dominate it.
With Juergen Stark and Lorenzo Bini Smaghi, Germany and Italy are already represented on the board. Economists said one of them will probably have to step down before his term expires to make way for Weber or Draghi and avoid giving either country too much weight in the ECB’s decision making.
“Stark will be upgraded to Bundesbank president,” said Carsten Brzeski, senior economist at ING Group in Brussels, who believes Weber will win the race. “Stark is a good Prussian. He’s dutiful and does everything that’s good for his fatherland. He’ll clean his desk.”
Apply for our overnight cash loan from $100 to $1500, deposited instantly in your bank account.
The U.S. economy grew at the fastest pace in more than six years during the fourth quarter of 2009, according to a government report Friday.
The nation’s gross domestic product, the broadest measure of economic activity, rose at a 5.7% annual rate in the fourth quarter. That was much stronger than expected and provides another sign that a recovery in the economy is taking hold.
Economists surveyed by Briefing.com had forecast growth of 4.7%.
Good end to a terrible year. The growth in the fourth quarter was the highest since the third quarter of 2003. The economy rose at a 2.2% annual pace in the third quarter of last year.
But even with the strong growth in the second half of 2009, the economy shrunk by 2.4% last year. That was the biggest drop in 63 years and first annual decline for the economy since 1991.
The GDP report does not mark an official end of the recession. That determination will be made by the National Bureau of Economic Research, and that group typically waits months — if not more than a year — to declare when recessions ended and began.
But two straight quarters of economic growth is typically a sign of a recovery, and most economists agree that the recession ended at some point in the middle of 2009. The Federal Reserve even used the word "recovery" in the statement following its latest meeting earlier this week.
Inventories lead the way. Much of the improvement was driven by a turnaround in inventories, the supply of goods that businesses produce in anticipation of sales. Businesses slashed inventories in late 2008 and early 2009 due to concerns about worsening economic conditions.
According to Friday’s report, 3.4 percentage points of growth in the fourth quarter came from the change in inventories. A pickup in auto production was a significant part of the inventory turnaround, even though auto sales themselves only rose modestly.
But the U.S. consumer was somewhat of a bystander in the fourth quarter, as personal consumption grew at only a 2% annual rate in the period. Spending by consumers accounts for more than two-thirds of economic activity.
Lakshman Achuthan, managing director of Economic Cycle Research Institute, said that growth from inventories shouldn’t be dismissed since they are typically a driving force of strong recoveries.
"In late 2008 into 2009 everyone freaked out to prepare for Armageddon," he said. "They fired everybody and stopped buying inventories. That overreaction is what’s being undone. Yes, you have to have jobs growth, but we’ll get that next, probably in January or February."
Other economists say the turnaround in inventories isn’t enough to lead to strong growth over a sustainable period. A better labor market that would give consumers the confidence and money they need to spend is also necessary.
"I’m not dismissing the inventory gain, but now that inventories are getting more into line with final sales, then the thrust of economic growth depends on final demand picking up," said John Silvia, chief economist with Wells Fargo Securities.
Stimulus, exports, also feed growth. Economic growth in the third quarter was greatly attributed to the federal stimulus bill passed at the beginning of 2009. But stimulus doesn’t appear to have had as big of an impact in the fourth quarter.
Federal spending on stimulus does not show up on any one line of the GDP report. In fact, government spending contributed little to growth by itself, even as non-defense spending by the federal government rose at an annual 8% rate in the quarter.
But money pumped into the economy by tax cuts, such as the first-time home buyer tax credit, coupled with spending by businesses that received stimulus dollars, did have an impact in the quarter, even if it was harder to quantify.
An 18% jump in the value of exports also played a major role in the economy’s rebound, contributing nearly 2 percentage points of growth. Silvia said exports have a chance to be a significant source of growth in the coming year, helped by the weaker dollar and stronger growth in developing economies, particularly in Asia.
Investment in business equipment and software jumped at a 13% annual rate, the biggest increase in nearly four years. That spending added almost a full point to GDP, and is often a precursor to employers starting to hire once again.
Slower growth ahead? Sung Won Sohn, economics professor at Cal State University Channel Islands, said there was good news in the report, but cautioned that the economy is unlikely to keep growing at such a strong pace.
"The not-so-good news is that most of the growth came from temporary factors such as inventories and government stimulus which can’t be sustained," he said.
Sohn’s forecast is for GDP growth of 2.6% in the first quarter, and only a bit higher than that for the full year. Silvia expects GDP growth of 2.3% in the first quarter of 2010, and 2.7% for the full year.
But Achuthan said growth doesn’t have to stay above 4% or 5% for the economy to start making significant gains.
"It is normal to have a burst of acceleration coming out of a recession, particularly a sharp recession, and then have growth ease back," he said.
Tena Mayberry, the president of Brentwood-based Century II Inc., has been named as CEO of Century’s parent company, Indianapolis-based Fortune Industries Inc.
Mayberry, who was recently named one of Nashville Business Journal’s Women of Influence for 2010, will also continue to serve as president of Century II, and will remain in Brentwood.
She was named Fortune Industries’ president since last year, after the formerly diversified company decided to focus solely on providing professional employer organization services, such as payroll and human resources, to small and mid-sized businesses.
“I am excited to have the opportunity to lead the company through all the strategic plans we put in place,” she told Nashville Business Journal Monday.
She said she expects FFI to grow as the economy recovers, thanks in part to a continued emphasis on sales even while the company was cutting back on other costs.
“I think 2009 is the worst. We can’t have another 2009,” she said. “Everybody I speak with seems to be ready to start talking positively.”
Departing CEO John Fisbeck offered glowing words.
“Tena Mayberry is a proven top executive and one of the most knowledgeable senior managers in the PEO (professional employer organization) industry,” departing CEO John Fisbeck said in a statement. “Under her direction, FFI is one of the few PEO companies that has been profitable for the last year during this difficult economic environment. … She is an inspirational leader with boundless energy and will lead Fortune as it continues to expand in the U.S.”
Mayberry has more than 20 years of management experience, including time with Contract Sales Managers, Kroger Co., and Norrell Temporary Services. She holds a bachelor’s degree in marketing and business management from Tennessee Technological University.
Fortune Industries (AMEX: FFI) is the nation’s fifth-largest publicly traded PEO, representing 14,000 employees in 47 states.
Fewer Americans than anticipated filed claims for unemployment benefits last week, pointing to an improvement in the labor market that will help sustain economic growth next year.
Initial jobless claims fell by 22,000 to 432,000 in the week ended Dec. 26, the lowest level since July 2008, Labor Department figures showed today in Washington. The number of people collecting unemployment insurance fell in the prior week to 4.98 million, and those receiving extended benefits jumped.
Companies are retaining staff as sales improve and production picks up. Gains in consumer spending, which accounts for 70 percent of the economy, may encourage more hiring in coming months, helping to bolster the rebound from the worst recession since the 1930s.
“It’s boding well for outright job growth,” said Stephen Gallagher, chief U.S. economist at Societe Generale in New York, who forecast claims would drop to 430,000. “It seems that some of the layoffs that took place in the early part of the year were excessive.”
Treasury securities fell after the report, pushing the yield on the benchmark 10-year note up to 3.84 percent, from 3.79 percent late yesterday. The Standard & Poor’s 500 Index dropped 1 percent to 1,115.1 at 4:09 p.m. in New York. The S&P 500 gained 23.5 percent this year, the biggest annual advance since 2003.
Unexpected Drop
Economists forecast claims would rise to 460,000 from a previously reported 452,000, according to the median of 29 projections in a Bloomberg News survey. Estimates ranged from 430,000 to 490,000.
“What we’ve seen is definite stability and just a hint toward things trying to get better,” Jeffrey Joerres, chief executive officer of Manpower Inc., said in a Bloomberg Television interview today. The world’s second-largest provider of temporary workers, is experiencing “slow but steady increases in people who are out on assignment,” he said. “It’s a little in every office, which is a good sign because it’s broad-based.”
A Labor Department spokesman said last week’s figures were “consistent” with recent trends and were not influenced by any unusual factors. Even so, the week of the Christmas holiday is difficult to adjust for seasonal variations, he said.
The four-week moving average of initial claims, a less volatile measure, dropped to 460,250 last week from 465,750 the prior one. Claims are down from a 26-year high of 674,000 in the week ended March 27.
Continuing claims decreased by 57,000 in the week ended Dec. 19, reaching the lowest level since February. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
Extended Benefits
Today’s report showed the number of people who’ve use up their traditional benefits and are now collecting extended payments climbed by about 199,000 to 4.82 million in the week ended Dec. 12. Twenty-nine of the states and territories where workers are eligible to receive government extension have begun to report that data, a Labor Department spokesman said. Two states have started reporting data on the latest emergency extension, he said.
President Barack Obama this month signed into law legislation that included a stopgap provision to ensure that unemployment benefits weren’t cut off over the holidays.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.8 percent in the week ended Dec. 19, today’s report showed.
State Breakdown
Twenty-seven states and territories reported a decrease in claims, while 26 reported an increase. These data are reported with a one-week lag.
The government is scheduled to release its December payrolls report on Jan. 8. In November, the economy lost the fewest jobs since the recession began two years ago and the unemployment rate receded to 10 percent from a 26-year high of 10.2 percent the prior month.
Even so, Americans are concerned about their financial future. Fewer consumers in December believed their incomes will increase over the next three to six months, the Conference Board’s confidence report this week showed.
Warren Buffett’sBerkshire Hathaway Inc. is among companies that slashed employment in 2009. The Omaha, Nebraska-based company last week said it cut 21,000 workers from its payroll amid a slump at the firm’s manufacturing and retail units. The company and its subsidiaries now have about 225,000 workers, it said in regulatory filings.
New Zealand’s economy grew less than economists estimated in the third quarter, driving the nation’s currency to a three-month low on speculation the central bank may not need to raise interest rates until mid-2010.
Gross domestic product rose 0.2 percent from the previous quarter, Statistics New Zealand said in Wellington today. That was half the median forecast of a 0.4 percent gain in a Bloomberg survey of 12 economists.
A decline in construction, manufacturing and business investment hobbled New Zealand’s recovery from its worst recession in 30 years. Reserve Bank Governor Alan Bollard said this month the bank may raise the benchmark interest rate from a record low sooner than he previously indicated should the economic rebound be sustained.
“The recovery is in train, but has been off to a subdued start,” said Khoon Goh, senior markets economist at ANZ National Bank Ltd. in Wellington. The data doesn’t “warrant hiking rates as early as March. We see June 2010 as the central case for when the tightening cycle starts.”
New Zealand’s dollar dropped to 69.75 U.S. cents, the lowest since Sept. 14, from 70.20 cents before the report was released. It bought 69.91 cents at 6:30 p.m. in Wellington. The currency had climbed 12 percent against the U.S. dollar the past six months and the NZX 50 stock index gained 14 percent on signs of a pickup in the economy.
Global Rates
Swaps traders are betting that the Reserve Bank of New Zealand will increase the benchmark rate by 203 basis points over the next 12 months, according to a Credit Suisse index.
“The recovery remains fragile,” Finance Minister Bill English said today. “To climb back up the world income ladder and to replace jobs lost during the recession, we need businesses to have the confidence to invest and create jobs.”
Central bankers around the world are assessing when to remove stimulus as the global recession abates. Australia and Norway have started raising rates and the Federal Reserve has committed to scale down buying of mortgage-backed debt.
Europe’s economy emerged from its worst slump in more than six decades, growing 0.4 percent in the third quarter from the previous three months. The U.S. economy grew at a revised 2.2 percent annual pace last quarter. Australia’s economy expanded in the three months through September for a third straight quarter.
Governor’s Comments
New Zealand’s central bank may begin to “remove monetary stimulus around the middle of 2010,” Bollard said on Dec. 10. In October, the governor said the nation’s benchmark interest rate would be kept on hold until the second half of next year.
The economy shrank 1.3 percent in the third quarter from a year earlier, today’s report showed. That compared with a 1.2 percent contraction estimated by economists.
“The central bank needs strong data in order to bring forward its tightening cycle to the same degree as the market has priced in,” said Stephen Toplis, head of research at Bank of New Zealand Ltd. in Wellington. “Is this the sort of data that would shift the Reserve Bank from its published view? You’d have to say no.”
Business investment fell 0.9 percent, the fifth straight decline, as companies spent less on plant and machinery, today’s report showed. Manufacturing dropped 1.9 percent and construction declined 4.4 percent.
Manufacturers, Retailers
Bridgestone Corp., the world’s largest tiremaker by sales, said in October it would close a plant in Christchurch, New Zealand, by the end of the year because of lower cost competitiveness.
Fisher & Paykel Appliances Holdings Ltd., the country’s biggest manufacturer of washers and dryers, said sales in the three months ended Sept. 30 fell 11 percent from a year earlier. Sales are likely to remain flat for the rest of the fiscal year, Chief Executive Officer Stuart Broadhurst said Nov. 27.
Smiths City Group Ltd. yesterday said sales at its furniture and appliance stores dropped 6.2 percent in the six months ended Oct. 31. “The retail environment has continued to be very tough and in big ticket, the worst for 20 years,” Chairman Craig Boyce said.
Warehouse Group Ltd., the nation’s biggest discount retailer, last month said sales were below expectations in the three months ended Nov. 1.
Household Spending
Household spending, which makes up 60 percent of the economy, rose 0.8 percent in the third quarter. Sales of cars, home appliances and other so-called durable goods gained 2 percent. Purchases of food and non-durable items fell.
Exports of goods and services were unchanged in the third quarter as increased spending by tourists offset a decline in commodity exports including meat and seafood.
The GDP deflator, a measure of prices, rose 2 percent in the year ended Sept. 30.
“GDP growth is showing little upward momentum from one quarter to the next,” said Ian Pollick, economics strategist at TD Securities in Toronto. “From a monetary policy perspective, this particular report is unlikely to light a fire under the RBNZ.”
Federal Reserve Chairman Ben Bernanke will be a featured speaker at an economic forum in Atlanta next month.
Bernanke will speak Jan. 3 at the American Economic Association annual meeting at the Atlanta Marriott Marquis.
Bernanke’s speech will open the AEA’s 125th anniversary meeting. The AEA publishes several economics periodicals, including the American Economic Review and the Journal of Economic Literature easy payday loans.
Other notables attending the three-day summit include Nobel Prize-winning economist and New York Times columnist Paul Krugman.
New York State is known as the nation’s financial capital, yet nearly one in 10 of its residents do not have a checking or savings account.
And while Texas is densely populated with banks, nearly a quarter of households in the Dallas-Forth Worth area have gone to a pawn shop or check cashing company recently to carry out a simple financial transaction.
Those were just a few of the findings of a new government survey released Wednesday on Americans’ access to basic banking services.
The survey, which tallied responses from roughly 54,000 U.S. households, marks the first time that the Federal Deposit Insurance Corp. has published such data.
Perhaps one of the biggest revelations of the study was that approximately 7.7% of all U.S. households, or 17 million Americans, were considered "unbanked," meaning they did not have any sort of a checking or savings account.
The most common reason cited, according to the study, was a lack of funds. More than a third of those considered "unbanked" said they did not have enough cash to warrant having a bank account.
In fact, nearly 20% of all U.S. households earning $30,000 or less per year did not have a bank account.
The study also found that almost a quarter of all households headed by someone who didn’t finish high school were considered "unbanked." Meanwhile, nearly one of every five African-American or Hispanic households do not have a checking or savings account, according to FDIC data payday loan.
Another key finding of Wednesday’s survey, was that many Americans that actually have bank accounts still look elsewhere to cash their checks or borrow money.
In fact, nearly 18% of all U.S. households have relied on payday lenders, pawn shops or check-cashing outlets at least once in the past five years.
Such businesses have often been criticized for charging consumers rates that would even make loan sharks blush. In some instances, borrowers pay the equivalent of an annualized interest rate as high as 500%.
People who were polled, however, said they continued to use these services simply because they were convenient or because it was easier to get a loan from them.
Hoping to migrate consumers away from such expensive options, the FDIC has enacted a number of initiatives including a short-term loan pilot program it launched in February 2008.
As part of the program, a select group of banks have agreed to offer short-term loans of up to $2,500 to low-income Americans.
Wednesday’s survey report was yet another effort to expand consumers’ access to basic financial services, agency officials said.
"By better understanding the households that make up this group — who they are and their reasons for being unbanked or underbanked, we will be better positioned to help them take that first step," FDIC Chairman Sheila Bair said in a statement.
Canadian Tire Corp., one of the nation’s most iconic retailers, introduced a dollar coin on Wednesday to complement its multi-hued, low-denomination stable of widely hoarded bills.
The move, first reported in the Star on Wednesday, puts an end to speculation that Canadian Tire was ready to eliminate its popular paper money loyalty program.
"Over the years the high-valued program has evolved to include electronic "Money" on Canadian Tire branded credit cards, as well as the addition of special promotions which now includes this limited edition $1 Canadian Tire coin," Canadian Tire Retail president Mike Arnett said in a release this morning.
The coin was created by the Royal Canadian Mint and will be given to customers who spend $25 or more at a Canadian Tire store on Dec. 5th or 6th.
The company held a press conference this morning to make the announcement, where Arnett also announced the company would develop and test a new rewards program throughout 2010.
However, a copy of a flyer destined for Canadian Tire stores in Quebec, obtained by the Star on Tuesday, shows an ad for a limited edition one-dollar coin. Images of the coin had also been posted on collectors’ websites, revealing it to look a bit like a quarter, with the Canadian Tire logo on one side and the beaming fictional Scotsman Sandy McTire on the other.
In a digital economy, Canadian Tire money is quite literally throwback to an era of physical cash and human interaction that scarcely exists in this online age of speedy and efficient consumption.
But a decision to cancel the paper money program would surely shock the nation - not least, the money’s ardent collectors - even if the retailer has already moved to a parallel electronic rewards program using a credit card and electronic Canadian Tire money.
"Whenever my dad went and got stuff for the house, he’d give me the money," said Roger Fox, 64, who has been collecting Canadian Tire bills since 1963, is a past-president of the Canadian Tire Coupon Collectors Club and wrote a chapter on the subject for a book published by the Royal Canadian Numismatic Association. The coin is a dramatic introduction for collectors such as Fox: Is it a heartbreakingly thrifty move away from paper money or a reassertion of the importance of the rewards program?
"They may be cutting back their printing costs while at the same time not eliminating Canadian Tire money altogether, but replacing say, the 50 cent, dollar, and two dollar (bills) with a coin," Fox said, adding, "I’m just thinking out loud, that’s all. I have no proof."
Canadian Tire has been making a gradual shift away from emphasizing its paper money.
The company’s exclusive credit card, Options Mastercard, introduced in 2000, lets shoppers accumulate Canadian Tire money wherever they shop, at a better rate than using cash.
In its promotions, the company refers to it as "Canadian Tire money rewards" - with quotation marks around money.
Customers now receive paper money only if they use cash or debit.
Jerome Fourre, a collector since 1985 from the Montreal area, said that after a golden age of 5 per cent Canadian Tire money returns - $5 for every $100 spent - the current return is more like 0.4 per cent, or 40 cents for every $100 spent.
The company does not release such details on the loyalty program and refused, not for the first time, to comment on Fourre’s calculations.
"Canadian Tire money was originally to get people to pay cash," said Fourre.
"In 2009, cash is not what they want."
For its part, the company said it has no immediate plans to cancel the beloved bills, though it is obviously trying to yank its rewards program into the modern era.
Collectors such as Fourre and Fox - part of a national subculture of clubs, meetings and exhibits devoted to Canadian Tire money - want to see the paper bills survive, though eliminating them would probably up the value of their stashes.
"When it’s on plastic it’s not something you have tangible in your hand," Fox said.
"It’s as if you’re getting something for free.
"Who doesn’t want something for nothing?"
Spanish producer prices fell the least in six months in October as oil prices rose.
Prices of goods leaving Spain’s factories, mines and refineries declined 4.2 percent from a year earlier, the National Statistics Institute in Madrid said today, after a 5.4 percent drop in September. Prices were unchanged from the prior month, today’s report showed.
The price of crude oil rose 14 percent in the year to the end of October and traded at $76.94 today. Weak demand is still pulling producer prices lower as the Spanish economy contracted for a sixth quarter from July through September even as Germany, France and the euro region expanded.
Spanish consumer prices have been falling in annual terms since March, as inflation slows more sharply than in the euro region overall. The Spanish economy may contract 0.7 next year, the International Monetary Fund forecast on Oct. 1, while the euro area, the U.S. and the U.K. post full-year growth.
Industrial production in Spain decreased 12.5 percent from a year earlier in September, declining for a 17th month as companies reduced staff to weather the slump. Nissan Motor Co. cut production of cars and light trucks 57 percent in September from a year earlier, compared with a global decline of 8.5 percent, it said on Oct. 28.
Powered by WordPress -- XHTML 1.0