Article:
TOKYO (Kyodo) -- Japan's household spending fell 6.0 percent in March from a year earlier, logging the largest drop in five years amid government calls for the public to stay at home to curb the further spread of the new coronavirus, government data showed Friday.
Spending in real terms by households with two or more people was 292,214 yen ($2,750), the Ministry of Internal Affairs and Communications said.
A ministry official told reporters the spread of the virus reduced spending on activities such as eating out and leisure as people avoided nonessential outings.
Ideas:
On the positive side, a drop of 6.0 percent is not good, but it could have been worse. Most likely, even though this article doesn't talk about it, online spending might have increased for some sectors. For example maybe there were increases in sales for Amazon Japan, Rakuten, and other place. And then maybe for those places that already had some kind of online presence.
But the overlying factor has to be consumers are worried and scared about job losses, income losses etc. and as such are holding back on spending.
And then there are the companies who are hurting because of decreases in consumer spending.
Article:
Household spending fell for the sixth consecutive month since October last year, when the consumption tax was raised from 8 percent to 10 percent.
The 6.0 percent year-on-year decline was the steepest fall since a 10.6 percent plunge in March 2015 caused by a last-minute surge in demand the previous year ahead of a consumption tax hike from 5 percent to 8 percent in April 2014.
"So-called 'nest-dweller consumption' such as expenditures on foodstuffs for cooking at home increased, but the negative effect caused by people refraining from going out had more impact," the official said.
Ideas:
A decrease in spending because of the sales tax was a given. But most thought that by January of 2020 consumer spending would be close to normal before the sales tax increase. In 2014 after the sales tax increase from 5 percent to 8 percent consumer spending took only about quarter, 3 months, to get back to what consumer spending was before the 2014 sales tax increase.
"Nest-dweller consumption" most likely would never make up for the losses related to consumer spending outside of the home.
On the other hand, again, there has to be some gain related to online shopping and spending. It would seem natural or logical.
However, again, consumers are worried about job losses and decreased incomes or even saving, and as such have maybe even refrained from some online shopping other than essential items.
Article:
As for April, the official predicted the downward trend would continue due to the state of emergency declared over the virus pandemic by Prime Minister Shinzo Abe.
The declaration was issued on April 7 for Tokyo, Osaka and five other prefectures and later expanded to cover the rest of the country and extended to May 31.
"We shouldn't assume that the figure touched rock bottom in March," the official added.
By category, outlays for culture and recreation were down 20.6 percent, the largest contributor to the overall drop, with those for domestic and overseas package tours plummeting 83.2 percent from a year earlier.
Ideas:
The prefectures that were in a suggested lock down of course makeup the bulk of spending in the economy, or should we more politely say more consumer spending overall in those prefectures.
Yes, most likely, unfortunately, April and even maybe May might be be like March or a little worse. But everyone is hoping the continued good weather might be an occasion to maybe, be cautious, and get out and spend some on outside activities.
Domestic travel, which also includes domestic spending, needs, with caution, to get back as quickly as possible.
People weren't meant to be locked down in their homes for a long time.
There has got to be a better way to solve the virus situation instead of everyone being afraid to go out. But at the same time be cautious and safe.
Article:
In the same category, meanwhile, expenditures on game consoles and software more than doubled and those on internet connectivity rose 12.4 percent, apparently reflecting longer hours people spent at home.
Food expenses overall fell 2.4 percent, with those on dining out decreasing 32.6 percent, while expenditures on meat and grains were up 10.3 percent and 9.5 percent, respectively.
Social expenses such as congratulatory money and outlays for suits and other formal clothing also declined. The official said those might have been caused by a spate of cancellations of various events including graduation ceremonies.
Ideas:
Spending on items for use inside the home would of course increase. At the same time, I have noticed an increase in prices of notebook computers on Japan Amazon and US Amazon. Either from an increase in demand and or because of low supplies, due to supply and logistics challenges.
An increase in internet usage would be logical and families are locked down at home, and company employees are working from home.
A 2.4 percent decrease in food spending might not be that big of a deal, except for the stores/places that would usually get consumer spending. A 32.6 percent decrease in dining out of course is very much expected as consumers shifted to eating at home.
An increase in meats and grains, again, would be logical as consumers would buy those products and use them at home. However, sources inside Japan have said the there have been shortages of rice in some places. Even with a limit on the number of bags, of say 1 per customer, a family of four would go to the supermarket and each member of the family would buy one bag of rice.
The decrease in outlays also is not expected as many event were either cancelled, postponed or limited.
Article:
After adjusting for inflation, the average monthly income of salaried households with at least two people was up 1.5 percent this March from a year earlier to 490,589 yen.
Household spending is a key indicator of private consumption, which accounts for more than half of Japan's gross domestic product.
Ideas:
The idea that monthly income increased sounds good but that is the average. What is the high and what is the low, and what is the dispersion between the average and the low. Meaning there might be a large group below that number, especially if someone worked for a business that was hit hard by the virus situation.
Yes household spending or consumer spending makes up more than half of Japan's GDP, which means Japan, like all other countries can't go too long in the current situation.
There are just too many variables or people involved in all kinds of sectors or industries that rely on consumer spending.
The Bank of Japan and the government, while doing a lot, can't sustain every business and every family forever.
The economy itself need to get back to some kind of "new normal".
Have a nice day and be safe out there!
© 2020, Tom Metts, all rights reserved
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