Money: Retailers foresee holiday joy — even as Poloz looks to hold line on rates: Don Pittis - - PressFrom - Canada
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Money Retailers foresee holiday joy — even as Poloz looks to hold line on rates: Don Pittis

13:15  03 december  2019
13:15  03 december  2019 Source:   cbc.ca

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Even after the speech promising clarity, which Poloz said was written "at about a Grade 12 level," it was pretty clear that the governor's words could be read As the Bank of Montreal's Benjamin Reitzes pointed out after the speech, there were clear statements hinting Poloz would hold off on raising rates .

With rates already so low, it is not clear even a half-point cut would convince business borrowers to take out additional loans to expand their businesses just when they have been warned a recession is about to strike. Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands.

a sign on the side of a snow covered street: The latest GDP figures indicate that neither real estate sales nor consumer spending need a boost from lower rates. And a bout of snowy weather often puts consumers in a holiday shopping mood. © Provided by cbc.ca The latest GDP figures indicate that neither real estate sales nor consumer spending need a boost from lower rates. And a bout of snowy weather often puts consumers in a holiday shopping mood.

Editor’s note: The opinions in this article are the author’s, as published by our content partner, and do not necessarily represent the views of Microsoft News or Microsoft.

South of the border, there was much hand-wringing that a shortened holiday spending season this year just wouldn't give our American cousins enough time to shop till they drop.

According to some retail analysts, a late Thanksgiving meant a late Black Friday, viewed as the starting gun for the U.S. Christmas spending frenzy.

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Poloz is right to be nervous as he begins his seven-year term Monday as the new chief of Canada's central bank. Low rates make the price of your house rise as everyone piles into the market. They make people want to buy houses, stimulating the construction and real estate industries.

As Poloz says, when the labour force gets smaller, the contribution of labour to the economy shrinks with it. One place to look for the money? Until interest rates begin to rise, the only way to discourage this flood of money into Poloz 's "unproductive investments" is to continue Flaherty's policy

Of course, Canadians celebrate Thanksgiving a month earlier and don't quite have that same special Friday to shop, shop, shop. But there is reason to think the season of retail therapy that is also a phenomenon here will give Bank of Canada governor Stephen Poloz one less reason to cut interest rates.

Most analysts expect Poloz to hold rates steady at 1.75 per cent tomorrow, and sturdy consumer spending is part of the rationale.

In a spending mood

Figures released last week show that despite an overall decline to 1.3 per cent in Canadian GDP, housing, consumer activity, construction and business investment were all holding up well.

Exports were down, but that could be partly blamed on a leaky pipeline that interrupted oil shipments and a General Motors strike that reduced the need for Canadian parts.

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  How Did Black Friday Get Its Name? The day after Thanksgiving, one of the busiest shopping days of the year, has a rather sinister label. How did that happen?If Black Friday is such a financial benefit, why is it called Black Friday? That modifier was usually reserved for cash-draining events like the Black Thursday that precipitated the 1929 stock market crash or the 1869 gold market collapse that led to financial ruin.

" Poloz is looking to raise rates , but there's always some political backlash, some popular backlash," says Rochon, co-editor of the As Poloz has repeatedly said, the need for rate increases is a sign the economy is growing stronger. Follow Don on Twitter @ don _ pittis . More analysis from Don Pittis .

Bank of Canada governor Stephen Poloz holds his next policy news conference on Wednesday, when borrowers will be listening for clues about the future of With many Canadians heavily indebted and a federal election coming, it will take a lot to make the bank change interest rates . ( Don Pittis /CBC).

Final holiday retail figures don't come out till the new year, but there are several signs Canadians remain in a spending mood. And that's despite Retail Council of Canada research that shows 18 per cent of Canadians plan to spend less than they have in the past.

Clearly, what you say to someone taking a survey doesn't always pan out.

Figures from last year show more than one-quarter (27%) of those surveyed ended up spending more in 2018 than they had planned. Only six per cent spent less.

Overall spending is expected to rise substantially in 2019, says the council's Michael LeBlanc.

According to Statistics Canada, consumer spending picked up in the three-month period ending in October. We can't be certain that consumer optimism will continue, but a long run of job creation and growing wages seem to point in that direction.

Certainly, analysis from Adobe Analytics shows that fears of a short U.S. shopping season seems to have only increased appetite for a consumption binge, as shoppers spent record amounts online.

Shoppers head out Black Friday instead of Boxing Day in search of holiday gifts

  Shoppers head out Black Friday instead of Boxing Day in search of holiday gifts Shoppers head out Black Friday instead of Boxing Day in search of holiday giftsThe shift comes as consumers increasingly plan to spend before Christmas and check gifts off their holiday lists, industry watchers say, and the change offers retailers a slight edge.

Bank of Canada governor Stephen Poloz has shown no inclination to raise interest rates despite rising inflation Despite strong job creation and 2% inflation, Bank of Canada has room to hold rates : Don Pittis . CPI-median lines up the sectors in order of their one-month volatility and uses the middle one.

Even as that fear faded, the U.S. steel and aluminum tariffs and U.S. President Donald Trump's threats against Of course, as Poloz remarked, Canadian business still has an interest rate advantage. ( Don Pittis /CBC). For those interested, the two extreme outlooks are described in Box 2 on Page 21

In the U.S. too consumer spending has been one of the mainstays of the economy, even as trade and business investment weakened.

While frigid weather and storms can drive people away from the shops, a layer of snow — like what landed on parts of the country this week — seems to stimulate the holiday shopping impulse.

Keeping the economy afloat

A spendy holiday season is important to retailers, those who invest in them, and to people who worry whether consumers can keep the economy afloat for a few more months as we wait for what some foresee as an economic revival. A rule of thumb says that one-quarter of overall retail sales during the entire year come in the days before Christmas as people splurge on themselves and others.

There are signs that so long as housing remains on the rise and consumers keep spending, Poloz will be in no mood to cut Canada's interest rates. As he and his deputy, Carolyn Wilkins, have warned in the past, lower rates that make borrowing cheaper may not be good for Canadians, who, as a group, have already borrowed too much.

Robert Seeliger standing in front of a store: Anticipation of a good holiday shopping season can persuade retailers to hire more staff to help with the December rush.© Provided by cbc.ca Anticipation of a good holiday shopping season can persuade retailers to hire more staff to help with the December rush.

If the next round of stimulus must come from fiscal spending, as the OECD has suggested, Poloz may decide to delay rate cuts well into the new year to see what impact government spending will have. (Thursday's speech from the throne may give a better idea of fiscal spending to come.)

Some economists have said that if Friday's unemployment numbers show us that the recent trend toward more jobs and fewer jobless is interrupted, it may be the first sign that the Canadian economy really does need a rate cut. So far, retail bank economists have offered wildly different predictions on whether the economy will gain or lose employment this time around.

And in the way that economies are recognized as self-reinforcing, expectations of a bumper holiday retail season will help contribute to economic strength — particularly as retailers shake the branches for extra staff in an economy where workers are, so far, still in short supply.

Follow Don on Twitter @don_pittis

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