It’s not every day you meet a chief executive officer named "Punkass." Especially one who runs a $200 million company.
The heavily tattooed, bandana-wearing CEO fits right in at TapouT, a 140-employee clothing company in Grand Terrace, Calif., that caters to athletes and fans of mixed martial arts, a combat sport known for its brutality.
Apart from the name, what makes Punkass and his co-founders unique is the commitment they made more than a decade ago to a sport that was then virtually unknown. They took a gamble on a market that barely existed.
The risk? If the market didn’t grow, TapouT would have nowhere to go. The reward? If the market exploded, they would be the first ones in.
Back in 1997, TapouT’s three co-founders — Dan "Punkass" Caldwell, Charles "Mask" Lewis and Tim "Skyskrape" Katz — had no college degrees and little money. But all three had trained in mixed martial arts and were ardent fans of the sport. They were confident that someday, the sport would be accepted — even embraced — by a mainstream audience.
So they took the kind of leap that would make little sense to anyone but their fellow true believers: They maxed out their credit cards to start a small operation selling t-shirts at underground mixed martial arts competitions.
Back then, mixed martial arts was still a fledgling movement, well under the radar of other apparel companies. Today, it’s almost as mainstream as boxing — and TapouT’s block-letter logo has become synonymous with the sport.
The company sponsors well-known fighters like Vladimir "The Janitor" Matyushenko and Thiago "Pitbull" Alves. (Along with tattoos and bulging biceps, nicknames are a must-have for practitioners of mixed martial arts). TapouT also sells clothing, mouth guards, nutritional supplements and other branded goods online and at retail chains including Macy’s and Champs Sports.
All those t-shirts and vitamins add up fast. Last year, TapouT raked in $200 million in annual revenue — more than 16 times its $12 million revenue in 2006.
So how does TapouT keep the mixed martial arts market in a headlock? Customers say it’s the early relationship the company developed with both fighters and fans.
"They’ve been right in the mix from the beginning," says Andrew Lang, co-owner of Lightning MMA, a mixed martial arts gym in Laguna Hills, Calif. "Those three guys were at all the events — they have this presence, this rapport with the fighters."
In the late ’90s, TapouT sponsored fledgling fighters for $300 a pop. Nowadays, sponsorships cost anywhere from $3,000 to $1 million.
"We have a full team dealing with our fighters and their managers 24/7," says Punkass. "We’re worried about their personal lives, too. How’s their new baby? How do they feel after a fight?"
The goal is to get fighters to wear TapouT gear in and out of the ring. That, in turn, has given the company mass appeal among fans — which come mainly from the sought-after 18- to 34-year-old male demographic guaranteed payday loans.
"I don’t know who’s more fanatic, mixed martial arts people or NASCAR people," says Marshal Cohen, chief industry analyst at the NPD Group, a market research firm. "But in either case, when you’re that fanatical there is a tremendous allegiance to a brand, and it’s all about the lifestyle. It’s almost like a club."
To make sure that club keeps growing, Punkass, Mask and Skyskrape brought a seasoned entrepreneur, Marc Kreiner, on board in 2006. Kreiner had a varied background — he launched disco bands in the ’70s and more recently started an infomercial company — but he helped bring TapouT products to over 20,000 stores worldwide. He also inked a handful of licensing agreements, including a line of TapouT-branded supplements with Champion Nutrition.
"We’re licensing a nutrition line, energy drinks and TapouT gyms," says Kreiner, now the president and chairman of TapouT. "The motto is ‘Grow big or go home.’"
But TapouT’s evolution had its low ebbs. In 2009, co-founder Mask — known for his big personality and signature face paint — died in a car crash. Kreiner, Punkass and Skrape were leveled by the loss of their friend and colleague. Many TapouT employees got commemorative tattoos in Mask’s honor with the word "believe."
Punkass says that Mask’s death has been the company’s biggest challenge to date. But TapouT has other, less tragic troubles. While mixed martial arts has toned down the violence a bit in recent years — the rules, for example, no longer permit biting and eye-gouging — some lingering controversy about the sport’s roughness could limit the growth of its fanbase, which is TapouT’s main audience.
A handful of smaller companies have also entered in the mixed martial arts apparel industry, including Dethrone Royalty Clothing and Hitman Fight Gear. But when it comes to the competition, TapouT’s main threat is much bigger players, like Nike and Adidas.
So could TapouT be the next sports apparel giant, akin to Under Armour?
It’s unlikely, suggests Cohen, the NPD Group analyst. But for the moment, at least, the company doesn’t have significant competitors vying for a share of the same market, he notes. And there’s plenty of room to grow: The overall sports apparel market rakes in $12 billion a year in the United States alone.
As TapouT lends its name to more and more products, the company runs the risk of diluting its brand and losing "street cred" with its loyal fan base. But Punkass isn’t worried about that.
"I don’t see ourselves making TapouT Ken and Barbie dolls anytime soon," he says. "We won’t make a product unless it connects to our core audience. We stay true to the brand."
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The Arizona Department of Environmental Quality has made several changes in the management structure at its Air Quality Division.
Ira Domsky was named director of information technology and a science adviser. He had been acting director since January. Domsky has been with the department for 26 years and previously served as deputy director.
Eric Massey, who has been with ADEQ for 11 years as a manager of air quality compliance and permitting, was named director cash advance loan. He had been acting deputy director since January.
Trevor Baggiore will become the division’s new deputy director. He has been with the department for nine years.
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Caterpillar Inc. said Montgomery is one of three sites in the Southeast under consideration for a “significant” manufacturing facility.
The heavy equipment manufacturer (NYSE: CAT) did not disclose details, but said also in the running are Spartanburg, S.C., and Winston-Salem, N.C.
Jim Dugan, chief corporate spokesman at Caterpillar, said in a statement that location analysis will continue through the summer and a final decision is expected by August.
Caterpillar is based in Peoria, Ill., and had 2009 sales and revenues of $32.4 billion. It manufactures construction and mining equipment, diesel and natural gas engines and industrial gas turbines, according to its website. Its products and components are manufactured in 50 locations throughout the United States and in 60 locations in 23 countries.
Lawmakers ripped into BP chief Tony Hayward on Thursday, accusing him of being ill-prepared for congressional testimony and not cooperating with an investigation into the Gulf of Mexico oil spill.
In Hayward’s first congressional appearance since the April 20 disaster, lawmakers wanted to know if BP had cut corners in an effort to save money in the run up to the explosion.
Questions during the 7-1/2 hour hearing, which included two recesses, focused on the well’s design and the measures taken while BP was attempting to seal it before it exploded.
"Did BP make a fundamental misjudgment" in using one long piece of well casing instead of many shorter pieces, as other oil companies said they would have done, asked Rep. Henry Waxman, D-Calif.
"I wasn’t involved in that decision," replied Hayward, saying that the single piece was better for the well’s long-term stability.
Waxman produced transcripts from BP’s engineers saying that the single casing was "unlikely to be successful." Waxman said BP went ahead with it anyway to save $7 to $10 million.
Hayward said he was "not prepared to draw conclusions about this accident until the investigation is complete."
"This is an investigation," said Waxman. "Are you cooperating with other investigations? Because they’re going to have a hard time reaching a conclusion if you stonewall them, which it appears you are doing today."
Rep. John Dingell, D-Mich., wanted to know how much it would have cost BP to perform additional tests on the cement in the well.
"I cannot say," said Hayward.
Dingell also wanted to know how much it would have cost to circulate a heavier drilling mud through the pipes, which may have prevented the explosion.
"I cannot say," replied Hayward, again.
"We thought we’d have more candid responses to our questions," said Rep. Bart Stupak, D-Mich. " You’re the CEO, you headed exploration, you know what’s going on."
Criticizing Hayward for his lack of answers became a theme of the meeting.
"Clearly Mr. Hayward is not prepared to answer the questions," said Rep. Joe Barton, R-Texas. "Any one of us could do a better job."
Apology flap
Barton may have been trying to deflect criticism after an earlier incident in which he called BP’s agreement to set up a $20 billion fund for spill victims "a shakedown" by the Obama administration, and apologized to BP.
The comment drew immediate criticism, with Rep. Edward Markey saying the fund is "the American government working at its best," and both the White House and Speaker of the House Nancy Pelosi, D-Calif. issuing statements blasting Barton.
There were reports some Republican lawmakers from Gulf states were asking him to resign as ranking member of the committee, and Republican leaders issued a statement saying "Congressman Barton’s statements this morning were wrong."
Barton later retracted his apology to BP and said he was sorry for using the term shakedown.
"BP is responsible for this accident, should be held responsible, and should in every way do everything possible to make good on the consequences," he said. "If anything I’ve said this morning has been misconstrued in an opposite effect, I want to apologize."
Hayward gets emotional
Tensions in the hearing were apparent before Hayward began testifying, when he was was interrupted by a woman shouting unintelligibly, her face and hands painted with oil.
After a brief struggle with police, she was removed from the room and arrested. U.S. Capitol Police say the woman was charged with unlawful conduct.
Hayward began his testimony by waiving his right to legal counsel.
He struck an emotional tone in his prepared remarks, acknowledging the loss of life and apologizing to residents of the Gulf Coast.
"When I learned that 11 men had lost their lives in the explosion and fire on the Deepwater Horizon, I was personally devastated," he said. "I want to offer my sincere condolences to their family and friends."
He went on to talk about the Gulf Coast economy and environment.
"I want to speak directly to the people who live and work in the Gulf region: I know that this incident has profoundly impacted lives and caused turmoil, and I deeply regret that," he said.
Hayward had been criticized previously for a sometimes callous approach to the disaster, especially the comment a few weeks back that he’d "like his life back" and that the "environmental impact of this disaster is likely to have been very, very modest."
In opening statements short on bluster and long on details, lawmakers outlined a series of steps BP took in the lead-up to the explosion that appeared to put cost above safety.
"Why would a team be sent home before performing a test?" on the well, asked Rep. Mike Doyle, D-Pa., referring to one of the decisions in question. "BP had several warnings, but instead of treating the well with caution, it seems BP was only interested was completing the well quickly and cheaply."
The well exploded 59 days ago, killing 11 workers. Millions of gallons of oil are still spewing into the Gulf, resulting in what some are calling the worst environmental disaster in American history.
According to congressional documents and interviews with workers on the rig when it exploded, it appears BP chose faster, cheaper techniques for drilling this well, sometimes against the advice of their sub-contractors.
Hayward said there was "no evidence of reckless behavior," contradicting President Obama, who referred to the company’s "recklessness" during Tuesday night’s address to the nation.
Hayward also said no BP employees have been laid off as a result of the accident, and that he did not believe cost cutting led to the explosion.
"If there’s any evidence that anybody put costs above safety I will take action," he said.
"I can’t believe you said that," retorted Waxman. "Of course there’s evidence."
– CNN staff contributed to this report
The Wichita City Council will hold a public hearing Tuesday to consider a proposal for STAR bond financing for the Bowllagio mixed-used entertainment district in west Wichita.
The development is seeking $13 million in STAR bonds.
The 40-acre area on West Kellogg on both sides of Maize Road would be known as the Bowllagio Star Bond Project District, according to a memo prepared for the council by the city’s Office of Urban Development.
Developer Jay Maxwell has proposed to the council that the district include a world-class bowling alley and training facility and a museum dedicated to the history of bowling. Other aspects of the plan would be a restaurant, bar and hotel.
Maxwell says he has secured an agreement with Atlanta-based NYLO Hotels to build a boutique hotel on the site.
The council already took the first step toward possible approval of the STAR bonds at its May 4 meeting by setting up the hearing.
In its memo, the office of urban development recommended that following Tuesday’s hearing, the council should schedule a vote on whether to move forward with approval of the development for STAR bonds. The Kansas Secretary of Commerce also has to sign off on the project before the bonds can be finalized.
The hearing, set for 9:30 a.m. Tuesday, will be a part of the council’s regular meeting, which starts at 9 a.m. in the city council chambers at 455 N. Main.
The state has established STAR bonds, or sales tax and revenue bonds, for special economic development projects throughout the state.
WASHINGTON — After nearly a quarter-century of selling pickup trucks and cars in North Dakota, Donovan Berscht had to shut one of his dealerships last year as Chrysler downsized. Now he is worried that a second financial jolt — this time the push for toughened economic oversight in Washington — could batter his remaining Chevrolet-Buick dealership.
If President Barack Obama has his way, loans at auto dealers would be put under the purview of a new federal consumer protection authority to guard against fraud and abuse. The prospect of increased regulations, Berscht said, “could force us out of the financing business,” and it has him so concerned that he traveled to Washington last month to ask Sen. Kent Conrad, a Democrat and one of his senators, for quick relief.
The financial reforms being debated in the Senate have prompted resistance from a variety of businesses, but perhaps nowhere more intensely than in the already beleaguered auto industry, where dealers find themselves pitted against Obama in their aggressive campaign to exempt themselves from the new rules.
For some 18,000 auto dealers in the United States, who historically have made up a potent political force, the debate presents a critical test of their continued influence in Washington, as they push lawmakers to help them hold on to revenue.
Through their lobbying arm, the National Automobile Dealers Association, the dealers have hired a crisis communication team, taken out full-page newspaper advertisements, and organized trips to Washington for dealers like Berscht to buttonhole lawmakers and make their case.
Their basic message, like those of many other industries threatened by tighter regulation, is that they did not cause the financial crisis, and they should not be penalized for it through a burdensome and costly new regulatory structure.
A vote on the proposed exemption for the auto dealers could come this week on the Senate floor, with neither side predicting victory.
For Obama, the issue is his latest attempt to push through broad legislative changes in Congress partly by singling out powerful players in the private sector.
In his successful campaign for a health care overhaul this year, Obama went after the nation’s major insurance carriers repeatedly as a symbol of why the health system needed to be fixed.
To try to restructure the country’s federal student loan program, Obama portrayed big providers of student loans like Sallie Mae as profiting from a “sweetheart deal” at the expense of struggling students. As in the health care overhaul, he won that debate in Congress, too.
And from the start of the current push for toughened financial regulations, he has cast the fight as an attempt to rein in the big banks on Wall Street, whose “reckless practices” he blames in large part for the economic downturn.
Last week, as the debate over financial regulation neared an end in the Senate, Obama identified a new target in a formal statement: The “auto dealer-lenders” seeking a “special loophole” in the legislation through an amendment pushed by Sen. Sam Brownback, R-Kan.
“This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise,” Obama said. The proposal, he warned, “guts” the bill and encourages “misleading sales tactics.”
The administration also linked the auto dealers exemption to the exploitation of military personnel. Officials released a Pentagon letter saying that many service members, according to an informal military survey, had fallen victim to “bait and switch” tactics and other predatory practices that left them with loans they struggled to pay.
Obama’s condemnation of unfair auto loans was the first time he has weighed in with a formal White House statement on a specific amendment of the sweeping financial regulation, and it caught many dealers and industry executives off guard.
Some dealers brand the White House’s account of auto loan irregularities as “pure fiction,” saying it mischaracterizes the process by which dealers facilitate or package auto loan requests for lending companies. Moreover, they say Obama has unfairly vilified their industry.
“The way the White House is portraying us as evil, it’s just wrong,” said Michelle Primm, the general manager of a family-run import dealership, Cascade Auto Group, about 35 miles south of Cleveland.
Primm made two trips to Washington last month to speak with both of her senators and Congressional staff members about the potential harm from the auto loan provision.
She and other dealers say they are already heavily regulated, mainly at the state level, through regulations that prohibit the loan abuses cited by Obama. They said the new federal regulations would only add costs to the way they arrange loans to buyers for big lending companies like GMAC.
But the administration maintains that the new rules are needed.
An administration official said on Sunday that dealers played a critical and profitable role in arranging the loan rates for many auto buyers, often at a higher rate than they qualified for. The White House also cited industry data showing that dealers made 52 percent of their profits in 2008 from financing and insurance, more than they made on the actual car sales.
The outcome may hinge more on influence than dueling data. On that front, the auto dealers have already proven formidable.
The auto dealers’ association spent $3 million last year on federal lobbying as part of a broader effort by the auto industry as a whole. Auto dealers, their employees and political action committees made political contributions of more than $9.3 million in the 2008 election cycle, most of it to Republicans, according to the Center for Responsive Politics, a nonprofit research group.
Perhaps more important than the auto dealers’ money is their deep presence in local communities, which can have a powerful impact on the lawmakers whose communities they represent, political analysts and lawmakers said.
Brian Hart, a spokesman for Brownback, said the dealers’ strong community ties had given them in-person access to many politicians to plead their case.
“Every member was very receptive to talking to their local dealers,” he said, “because they’re truly Main Street. People drive by them every day and know who they are.”
The auto dealers already demonstrated their political muscle on the issue in October, when the House passed its version of the financial overhaul but exempted the dealers from the consumer protection provisions. The exemption was pushed by Rep. John Campbell, a California Republican who is a former car dealer, and it came over the objections of Democratic leaders.
Berscht, the North Dakota dealer, is hoping for a quick resolution.
“I’m not a political guru by any means,” he said, “but there’s a real urgency to get this amendment in there on this major bill and to provide some relief for the auto dealers.”
Christopher Brassard, executive vice-president and director of Albany-based Ten Eyck Group, has been named chair-elect of the Independent Insurance Agents & Brokers of New York.
Brassard has served on the IIABNY board of directors since 2004, most recently as secretary-treasurer. He has also served on the Public Policy, Industry Practices & Producer Compensation, and Audit committees.
Brassard started his career with the Aetna Life & Casualty Insurance Co. and joined the Ten Eyck Group in 1988. He is a 1982 graduate of the state University at Albany School of Business and holds the Certified Insurance Counselor (CIC) designation.
IIABNY, which is based in DeWitt, N.Y., represented more than 1,900 insurance agencies in the state.
Higher demand and cost reductions triggered a sharp rise in net income in the first quarter at Astronics Corp., the East Aurora manufacturer said Wednesday.
Profits rose 142.7 percent to $3.4 million, or 31 cents per share, up from $1.4 million, or 13 cents per share, in the 2009 first quarter.
Sales in the 2010 first quarter were down 6.2 percent to $46.9 million from $50 million a year ago. The company noted the figure for Astronics’ DME subsidiary was for the entire period while the 2009 first quarter included DME sales for a nine week period. Astronics acquired DME on Jan. 30, 2009.
“Demand was higher than expected, especially for our in-seat power products, and our aggressive cost cutting over the last year drove solid margins,” said Peter Gundermann, president and CEO.
Astronics (NASDAQ: ATRO) produces lighting, electrical power and automated test systems for the areospace and defense industries.
Tax day is Thursday and if you’ve waited until the last minute to file your return, that makes you a prime target for tax preparers.
The days leading up to April 15 are like Black Friday for companies like H&R Block and TurboTax. And they’re all looking for an edge that will get you "in the door."
As more and more taxpayers spend time e-filing and scouring the Internet for tax help, finding ways to optimize online ads is invaluable for tax preparers. And that’s where Google comes in. The search giant’s analytics tools can narrow down when most people are searching for tax help, making it prime time for advertising those services.
Unsurprisingly, Google (GOOG, Fortune 500) says the volume of searches for terms like "tax," "taxes," and "IRS" doubles between February and mid-April. But by using advanced tools like Google Insights, tax preparers can find a much more revealing trend: The majority of people really only care about taxes for about six or seven days a year.
Search traffic for "taxes" surges an average 150% right after W2s are distributed during the first week of February. Those searches quickly die down and stay low until the days leading up to April 15. During the last three- to four-day stretch of tax season, tax-related searches rise an average of 270%. That’s nearly quadruple the amount that occurs during a typical week in the "off-season."
TurboTax, which is a Google Analytics customer, calls the trend "Batman ears": Two exceedingly short periods of time to get it right or pay the price.
"Google is really important to our business because it helps us understand consumers’ behavioral intent so we can serve up the right types of ads in the right places to the right people," said Seth Greenberg, director of national media and digital marketing at TurboTax. "There’s such a small window of time, and the margin of error is so tight."
TurboTax, which is owned by Intuit (INTU), took in just under $1 billion of revenue from its tax products last year, and $780 million of that came during tax season.
"The two peaks make or break tax companies’ years," said Jon Kaplan, head of Google’s financial services industry team faxless pay day loans. "They have to have a sound, focused marketing strategy that takes advantage of those three- to four-day peaks, and they can’t really have a bad day."
Cutting through the noise
As more people file online, competition is growing more intense: A search query for "taxes" on Tuesday returned sponsored ads from 11 of Google’s advertising partners, including TurboTax, H&R Block (HRB), and Jackson Hewitt, all promoting their free online e-file systems. Google said its partners spend tens of millions of search advertising dollars during tax season.
To cut through the noise, TurboTax said Google helps it offer its most relevant taxpayer ads at the most relevant time.
Some of the solutions have little to do with analytics. For instance, Google allows TurboTax to display two different types of ads: one for existing TurboTax customers and one for potential new customers. It also lets TurboTax do "remarketing." That is, showing ads specifically for customers who visited the site but ultimately didn’t use TurboTax’s products.
Other solutions are a little more involved. For example, Google’s data show that searches for "tax refund" soar in early February, when W2s go out, and then taper off. TurboTax says it found a correlation between early filers and those getting refunds, allowing the company to adjust its ads accordingly.
Google also found that most people clicking on TurboTax ads were from a younger demographic, which the company chalks up to the fact that it runs its tax business exclusively on the computer. As a result, TurboTax has turned to social networking to attract customers. It also had a "Tax Rap" competition this year, the winner of which is currently displayed on YouTube’s homepage.
In addition to the usual "taxes," "how to file," and "tax refund" searches, this year is bringing hot searches for "unemployment and taxes," as well as ones related to first-time homebuyer tax credit, new car purchase credit and Energy Star tax credits.
And the top tax-related search this week? "Tax extension."
Bank of Korea Governor Lee Seong Tae kept interest rates unchanged at his final meeting, leaving it to his successor to address political pressure to stoke economic growth.
Lee held the seven-day repurchase rate at a record-low 2 percent in Seoul today after Finance Minister Yoon Jeung Hyun said this week that now “is not the right time” to boost borrowing costs. The decision was forecast by 13 of 14 economists surveyed by Bloomberg News. One expected a quarter- point increase.
The government pressed Lee, whose term expires March 31, to hold down rates as the economy shows mixed signs: growth slowed in the fourth quarter, unemployment soared in January, exports have risen for four months and manufacturers’ confidence is at a seven-year high. Since January, Governor Lee has had to accept a vice finance minister sitting in on rate meetings.
Lee appears to have decided to “leave it to his successor to deal with the Finance Ministry pressure resisting a rate hike,” said David Cohen, a Singapore-based economist at Action Economics. “The fact that inflation narrowed a little bit in the latest report gave them a good enough reason to hold off for another month.”
Stocks, Currency
The won weakened 0.2 percent to 1,132.80 per dollar at 12:02 p.m. in Seoul, according to data compiled by Bloomberg. The currency earlier rose as much as 0.4 percent to 1,126.23. The benchmark Kospi stock index fell 0.2 percent to 1,659.15 as of 11:57 a.m. in Seoul today.
The Bank of Korea said in a statement it “will maintain the accommodative policy stance for the time being in such a way as to help sustain the trend of recovery in economic activity.”
“The central bank is unlikely to change the benchmark rate in the second quarter as it will be difficult to change the stance of monetary policy as soon as a new governor is appointed and financial-market concerns over the debt in some countries still linger,” said Lim Jiwon, an economist at JPMorgan Chase & Co. in Seoul.
President Lee Myung Bak is considering five candidates to head the Bank of Korea, DongA Ilbo newspaper reported last month, citing unidentified central bank and government officials.
These include Euh Yoon Dae, head of a presidential council set up to promote South Korea internationally; ex-Finance Minister Kang Man Soo; Kim Jong Chang, head of the Financial Supervisory Service; Park Cheul, a former deputy governor of the central bank; and Kim Choong Soo, envoy to the Paris-based Organization for Economic Cooperation and Development, according to the newspaper.
Markets Unconcerned
The failure to announce Governor Lee’s replacement three weeks before his term expires hasn’t spooked the markets instant credit report. The Kospi index has risen 3.8 percent in the past month and the won gained 2.2 percent over the same period.
Finance Minister Yoon told reporters on March 8 that “it is the government’s firm belief that it is not the right time for rate hikes” as business investment is weak and prices are at manageable levels.
Lee Sung Kwon, an economist at Shinhan Investment Corp. in Seoul, said policy makers may have held off on a rate increase as “concerns over tightening measures in China remain.”
China, South Korea’s biggest export market, in February ordered banks to set aside more deposits as reserves for the second time in a month to avert asset bubbles. In the fourth quarter, Chinese gross domestic product increased 10.7 percent from a year earlier, the fastest pace since 2007.
Unemployment Rises
In contrast, South Korea’s economy expanded 0.2 percent in the fourth quarter and unemployment surged to a 10-year high of 4.8 percent in January. President Lee has put unemployment at the top of the political agenda, vowing to cut the average jobless rate to about 3 percent this year.
The government boosted this year’s budget by 3 percent to 292.8 trillion won ($258 billion) and will accelerate distribution of funds as it seeks to maintain the recovery.
The central bank said the slowdown in growth in the fourth quarter was a temporary adjustment. In November, it widened the annual inflation target range to between 2 percent and 4 percent. Consumer prices increased 2.7 percent in February.
Asia’s fourth-largest economy is showing signs of strengthening. Exports climbed 31 percent in February from a year earlier, the fourth monthly increase. Samsung Electronics Co., the world’s second-largest mobile-phone maker, said its handset shipments may expand about a fifth this year, helped by demand for smartphones.
Manufacturers’ confidence for March rose to the highest level since the fourth quarter of 2002, when the Bank of Korea published its confidence survey on a quarterly basis.
The central bank’s failure to raise rates last year confounded analysts, who forecast it to be one of the first in Asia to move after the economy expanded 3.2 percent in the third quarter, the fastest pace in seven years. Since then, Australia, China, India and Vietnam have tightened monetary policy as Asia leads the recovery from the global recession.
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