More Japan Consumer Spending News:

https://the-japan-news.com/news/article/0006341081

TOKYO (Reuters) — Japanese household spending fell at a much faster pace than expected in December, sliding for the third straight month in a sign consumers are having a hard time coping with a sales tax hike.

The world’s third-largest economy is struggling to regain momentum after last October’s sales tax hike led consumers to curb spending. China’s coronavirus epidemic also poses a new threat to the global growth outlook and Japan’s output and exports.

Household spending slipped 4.8% in December from a year earlier, government data showed on Friday, coming in well below a median forecast for a 1.7% decline.

Following the tax hike to 10% from 8%, the first such rise in 4½ years, it tumbled 5.1% in October, the fastest pace of decline since March 2016, and dropped 2.0% in November.

“The warm winter is having a large impact as seasonal goods aren’t being sold,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“But consumer confidence is falling and taken together with the virus outbreak one can’t have high hopes of consumption for January-March.”

A government official also said the mild weather negatively impacted the sales of many goods in December, such as winter vegetables, while purchases of stoves and heaters also suffered from a post-tax hike pullback in spending.

Lower spending on eating out and entertainment also weighed, the official said.

Japanese policymakers are hoping for a recovery in domestic demand largely fueled by resilience in consumer spending to help soften the blow to businesses’ profits from a delayed pick-up in global growth.

Stronger consumer spending is also needed to help achieve the Bank of Japan’s elusive 2% price target.

Sluggish wage recovery is leading to further worries about private spending, with inflation-adjusted real wages falling 0.9% to also drop for a third month in December.
For the whole of 2019, real wages also lost 0.9%, reversing a 0.2% gain in 2018, the data showed.


Comments, analysis, ideas:

As with the previous article, related to overall GPD, this article focuses more on consumer demand which, some say, makes up 50% of the Japanese GPD or Japanese economy.

The idea that there would not be a decrease in consumer demand, should not be a surprise to anyone.

But the problem is, many seem to make it out as a major/serious continuing problem.

The media, for example in September, and I went to Yokohama Japan, for a few days to observe the situation, was trying to hype the idea that consumers better spend now, or lose out.

Businesses also were having a lot of pre-tax increase sales during the month of September.

As such, it seemed like a consumer spending frenzy, at least in Yokohama, around the Yokohama station area.

Of course the winter weather has not been as cold as expected or wanted by retailers who sell winter type clothes, heaters and such.

Even winter vegetables, also from another previous article, the winter growing season, produced a large surplus of vegetables which meant a surplus or over-supply of the vegetables which forced prices down and as such farmers and retailers didn't make the profits that was expected compared to other winters.

And also the ideas of less eating out and entertainment, might be related to the sales tax increase.

Also the ideas of wages and such. The BOJ has been attempting to get companies, which sit on a lot of unused cash to increase wages. As wages increase workers/consumers feel better about some extra income and will begin to use it spend more in the economy.

Take away the virus situation, which of course also affect tourist spending, which is a big challenge, but just taking into account Japanese citizen consumer spending, as with 2014, I expect Japanese domestic consumer spending will be back to near normal in the future.

But the virus situation, as it is being played out now might even affect consumer spending for 2020 Q1 until the media and all can calm consumers and not cause a panic in the economy through rumors and such.

The Japanese consumer spending sector does not need a multiplier affect, in that more bad news leads to even more negative consumer sentiment in the economy.



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