Canadians revel in exchange rate

A survey found Canadian shoppers planning to spend 14 percent more per person than last year.

ASSOCIATED PRESS

Last year, Canadians might have accounted for half of the holiday weekend shoppers who showed up in the first few hours at the Country Clutter gift store at the Prime Outlets mall in Grove City, Pa.

This year, a store manager estimated that number has probably risen to 75 percent.

And why not? With the value of Canadian currency up, many consumers there are feeling good. “They’re getting more for their dollar,” said Nathan Kilmer, who doesn’t begrudge the United States’ northern neighbors their turn on the better end of the exchange rate.

A recent gift-giving survey from Visa Canada found shoppers planning to spend 14 percent more per person than last year — the highest personal spend recorded in the survey’s nine-year history.

By comparison, surveys of American shoppers lately seem to find them cutting back or at least holding the line on holiday spending.

Even if they don’t personally have a subprime mortgage or have seen the value of their homes drop, the talk of a potential recession and the reality of high gasoline prices may be having an impact.

“People may be a little bit more antsy,” said Jim Craft, a business professor at the University of Pittsburgh.

The term “credit crunch” probably isn’t one that comes up as consumers prepare the weekly grocery list or consider whether to buy a new couch for the living room. But that doesn’t mean access to credit doesn’t have an impact on their spending choices.

It wasn’t that long ago economists were marveling at the impact of the “wealth effect.” Consumers might not have had lots of extra money lying around but they felt wealthier because their mutual funds were doing well and the value of their homes seemed to be rising.

More than a few refinanced their mortgages or took out home equity loans to finance spending.

American consumers may end up shrugging off their worries and get back to the business of spending that helps drive the U.S. economy.

The Federal Reserve tried to offer a bit of reassurance and support earlier this month when it dropped certain interest rates.

“The psychology of the whole thing is certainly important,” said Craft. “If people feel that we’re going to have a recession, they won’t spend.”

Wal-Mart Stores Inc. announced this year that it would moderate its U.S. supercenter growth, with plans for 195 new stores down 30 percent from last year’s level. Next year, the company expects to open 170 supercenters, including expansions and relocations.

Transportation company FedEx Corp. said last week that it might not open Kinko’s locations at such a rapid clip, as a slowing economy and high fuel costs have persuaded executives to cut back where possible.

The credit crunch doesn’t seem to be directly affecting new deals for retail sites, said Herky Pollock, an executive vice president with CB Richard Ellis/Pittsburgh.

Yet he has noticed more caution among some retailers playing out in another way.

In recent months, he’s had four cases in which national chains with signed leases for new stores have pushed back their opening days.

His theory is that chains are trying to meet store expansion projections they’ve given Wall Street analysts without exceeding them. They can use those new stores to bolster next year’s numbers.