Japan: Consumer Spending:

https://mainichi.jp/english/articles/20200306/p2g/00m/0bu/035000c

Article:

TOKYO (Kyodo) -- Japan's household spending fell 3.9 percent in January from a year earlier, a fourth straight monthly decrease, as warm weather dented winter-related activities such as skiing and sales of seasonal goods, government data showed Friday.

Spending by households with two or more people totaled 287,173 yen ($2,700) in real terms, the Ministry of Internal Affairs and Communications said.

 The consumption tax hike to 10 percent from 8 percent on Oct. 1 also continued to hurt consumption, a ministry official said.

The decline was smaller than the 4.8 percent fall recorded in December, and the 5.1 percent drop logged in October, but the pace worsened from a 2.0 percent decline in November. 

Comments and Ideas:

Consumer spending is always a concern in any country but it seems even more in Japan, most likely due the ageing population trend that puts Japan as 1 or 2, with South Korea being the other country, meaning the population is ageing faster than any other country, save SK, which is in the same situation. What is means is that the 65+ age group tend to spend less than the 20 to 65 age groups. But to be fair, if we look at the spending habits of the 20 to 65 age groups in Japan, we see they are spending at the same level as any other advanced country in the OECD.

Anytime there are changes in weather conditions or other variables, it could potentially have an affect on consumer spending. The unusually warm winter has obviously affected the spending on winter type products.

Consumers also are probably trying to figure out how to get used to the increase sales tax. But if we look back to 2014, when the sales tax increased from five to eight percent in Q3, it seemed consumers were able to adjust to the extra sales tax and or got used to it.

Taking out the virus situation, I would have expected the same idea this time as consumer would eventually adapt and or get used to the increased sales tax.

Article: 

The official said that the impact of the new coronavirus outbreak was "not clearly seen" in the reporting month but will likely be reflected in the data in the coming months.

The spread of the virus is pressuring spending on dining and leisure, among others, as people stay home to avoid exposure. At the same time, purchases of daily commodities, sparked by panic buying, are on the rise, making it difficult to foresee how overall consumption is being affected, the official added.

Outlays on "transportation and communication" dropped 7.9 percent, and those on "education and recreation" sagged 6.1 percent.

Health care expenditures, the only category showing an increase in the month, rose 3.1 percent, partly due to increased purchases of sanitizer and masks.

After adjusting for inflation, the average monthly income of salaried households with at least two people was up 2.1 percent from a year earlier to 484,697 yen.

Household spending is a key indicator of private consumption, which accounts for more than half of Japan's gross domestic product. 

Comments and Ideas: 

The virus situation, as this point in time, has not caused wide panic or major economic problems. But in other articles in April, yet to be commented on, we see major challenges to the economy.

But we begin to see some areas affected; Consumers and families are beginning to eat out less, choosing bento or takeout meals instead of going to restaurants.

And we see the beginnings of panic buying. Panic buying is the result of fear or not knowing the future. Most supply chains and stores can usually handle extra buying surges or binges, but if it becomes too excessive, the food supply chains and stores become challenged in keeping needed products supplied in store. 

Of course, in a sense, it can be a positive in that the demand for certain kinds of products will boost the production and sales of some companies. 

In any economic situation or circumstance there are going to be positives and negatives, and in this situation is not much different. But in a sense it is very different, as societies and economies have not faced all of these challenges at the same time, in recent times.

Have a nice day and be safe out there!

© 2020, Tom Metts, all rights reserved