Japan News: Consumer Spending Comes Back: As Expected:

https://www.yahoo.com/finance/news/japan-services-sector-returns-growth-004518869.html

This is not a surprise or unexpected that the services sector and consumer spending has increased. Just like in 2014, when the Japanese government announced a consumption sales tax increase starting in April 2014 there would be an increase from 5% to 8%.

So what happened in the first quarter of 2014; a huge increase in consumer spending, as consumers were spending early to beat the sales increase.

This is related to normal economic supply and demand, in that if there is going to be an increase in the price of products consumers, or whomever, will purchase something early to be the sales increase.

So what happened in the 2nd quarter when the sales tax went into effect in 2014; there was a  large decrease in consumer spending as consumers either had already purchased what they wanted to decide to not buy or buy alternatives that might have been less expensive

So then what happened in the 3rd and 4th quarter related to consumer spending; consumer spending went back to normal, or before the announced sales tax increase.

As usual, anywhere, consumers begin to get used to the extra sales tax and or they find alternatives that might be a little less cheaper than their normal products. Most likely though, we/consumers just get used to the idea that now we have to pay a little more for a product or service.

The idea of an 2% increase is not going to affect many of the everyday products or services a consumer might purchase.

Of course its going to have much more of an  affect a new car, a new home, or big purchase items whatever they are.

So they same idea for the 2019 increase from 8% to 10%.

Back in September in Japan, and I was there for a few days during the Korean Chuseok, or Korean thanksgiving holiday period, it seemed like people/consumers were going crazy and there seemed to be a media frenzy about "you better buy now" before the sales tax increase.

Along with many stores and places having pre-tax sales or sales campaigns as they call them in Japan.

It seemed shoppers were going kind of crazy.

But even a month later, in October, in the news, citizens/shoppers said, they thought they had bought too much in September and the increase was not that big a deal.

So now we see consumer spending back to normal or almost, as in Japan its is always a question mark, always a challenge, always watched very carefully by the Bank of Japan etc.

© 2020, Tom Metts, all rights reserved