Japan Industrial Output:

 https://mainichi.jp/english/articles/20201130/p2g/00m/0bu/052000c

Article:

TOKYO (Kyodo) -- Japan's industrial production rose 3.8 percent in October from the previous month, gaining for the fifth straight month, supported by a recovery in demand for machinery and autos from a pandemic-induced slump, government data showed Monday.

The readings in the reported month showed that output in some sectors has returned to levels before the spread of the novel coronavirus but the industry ministry warned of downside risks going forward due to the recent resurgence of infections globally.

Ideas and Commentary:

What exactly is industrial production or industrial output? It simply measures the volume of products produced in an economy.

It is probably more important to GDP growth than services because industrial output is sensitive to changes in demand and interest rates while services seem more inelastic, meaning demand is more stable in an economy as the demand for most services daily and weekly necessities that consumers need.

So the ideas that IP rose 3.8 percent might indicate an increase demand related to products produced.

Why the increase in machinery? Only two real viable reasons; there was a need to replace older machines and the need for new machines as production increase. 

Why an increase in cars? Consumers mostly likely were waiting for the opportune time to buy a new car as maybe because the pandemic were waiting due to job losses or incomes losses/decreases.

But October is not November. In September and October there seemed to be less worry about the pandemic but in November a lot has changed in two or three months. 

Article:

The seasonally adjusted index of output at factories and mines stood at 95.0 against the base of 100 for 2015, the Ministry of Economy, Trade and Industry said in a preliminary report. The result followed a downwardly revised 3.9 percent increase in September.

A 17.9 percent increase in the production of general machinery, including conveyer systems in the retail sector and steam turbines used for electricity generation, as well as a 6.8 percent gain in auto production on the back of firm exports contributed to the overall output rise, the data showed.

The electrical machinery and information and communication electronics equipment sector saw an 8.4 percent increase, propelled by a boost in demand for computers used in remote working in Japan to curb the spread of the virus.

Ideas and Commentary:

As more economic activity increases the need always for the replacement of machinery and or the need for extra machinery in production facilities. Not to mention possibility the need for investment in new production facilities as older production plants and equipment needs to be replaces or updated.

But another question needs to be asked. Just how much capacity in these facilities are being used now? Are they at 100 percent capacity or lets say only 50 percent capacity?

Of course because of the increased demand for computers for home use the production of computers and parts have increased a lot. 

And related to supply and demand, maybe a combination of both, as demand increases the prices of products/computers goes up.

For example in Nov. 2019 I bought a notebook computer on US Amazon for $169. A year later it is $259. As the demand for computers and computer products have increased not even Amazon is keeping prices low.

You might say that price was too low. Yes it was a sale price but the same computer was over $300 this spring due to shortages, logistics challenges and or a surge in demand due to more home use and Zoom use.

But at the same time we might say supply challenges might be the reason for the higher prices, or a combination. As supply chains become challenged quite possibly the supply of some products such as notebook computers are in short supply which in regular supply and demand theory will also forces prices up.

So either way we have higher prices on some products such as all kinds of computers.

Article:

A ministry official said the ministry is closely watching how the recent resurgence of coronavirus infections will affect manufacturing activities in the coming months, noting "downside risks" to both domestic and overseas economies.

Manufacturers polled by the ministry said they expect output to rise 2.7 percent in November but fall 2.4 percent in December.

The ministry retained its assessment for October, saying industrial output is "picking up."

"It will still take time for the index to recover to the pre-pandemic mark of 99.8 in January" despite the production levels of autos and electrical machinery and information and communication electronics equipment returning to levels before the coronavirus outbreak, the official said.

Ideas and Commentary:

Manufacturing activities can be affected in two or three ways;

First if the manufacturing facility has an increase in the virus cases among its employees that has the potential to reduce production, has happened in many manufacturing plants in the US. 

Second supply chain challenges which might affect the ability to ship the products to wherever especially to global markets.

Third  the decline in overall demand either domestically or internationally. All three in some combination could have an affect on production.

Industrial output might be picking up of course but at what capacity. Is capacity back to 100 percent or some number lower?

Bu the next paragraph is telling as it infers to ideas; The ideas of "picking up" might indicate the some production plants are not at full capacity yet and it will take time to get to full capacity as demand increases.

And second an economy is very complex and complicated and each sector or part of an economy never grows at the same pace or speed. 

And as such every economy is always in kind of crisis or somewhere in any economy there are those parts doing well and those parts not doing so well.

So the same idea applies here. Not all parts of the economy, the Japanese economy, for example, is going to grow and or come back as the same pace. 

Article:

Looking ahead, Takeshi Minami, chief economist at the Norinchukin Research Institute, said that the upward momentum of industrial output will not last for a long time.

"The preliminary reading for October showed a recovery but as the regions in the northern hemisphere face the winter season and the coronavirus pandemic is expected to spread, the pace of economic recovery will likely slow down," Minami said.

"The index is expected to fluctuate also as an increase in auto production, which has been one of the contributors to the output boost in recent months, is forecast to decrease in November and December," he said.

In October, the index of industrial shipments climbed 4.6 percent to 94.7 while that of inventories was down 1.6 percent to 95.9.

Ideas and Commentary:

I think the key word here is "fluctuate" meaning growth is not going to be a linear process. There are going to be some areas that might actually grow in an upward linear path and some areas that are going to be up and down, and will fluctuate a lot depending on demand and depending on just how strong the winter pandemic situation will have an affect.

Despite the recent news of the vaccines in might not be until the spring or summer that we see the full affect of the vaccines.

Until then producers and companies are at the mercy of consumer demand, which they always are, but add in the winter pandemic situation and it compounds the situation. 

Economics sometimes likes to use the phrase "multiplier affect." Meaning in this case, increase demand in a product might cause more demand in a product and of course the opposite in true, less demand in a product might have the potential the cause less demand for product.

There is a synergy or energy affect. The more energy that is created then even more energy will be created.

It can work either way in an economy. As demand picks up that creates more demand in an economy.

Now add in the winter pandemic affect and the more the winter pandemic has on decreasing consumer demand then it will cause even less demand as the winter pandemic carries on.

Or... maybe not? We shall see what happens. 

Have a nice day and be Safe!

Japan Auto Output: Ideas Later: Its Cars But Still About People.

 https://mainichi.jp/english/articles/20201127/p2g/00m/0bu/076000c

Article:

TOKYO (Kyodo) -- Total global output by eight major Japanese automakers rose 2.7 percent from a year earlier to 2.44 million vehicles in October, continuing a gradual recovery from fallouts of the coronavirus pandemic, manufacturers' data showed Friday.

The production increased for the second straight month following a 1.7 percent growth in September.

Ideas and Commentary(Analysis):

A year ago, if it had any affect there was a major typhoon that hit Japan in early September. The affect of the typhoon might had reduced production in some areas.

And then there was the sales tax increase from 8 percent to 10 percent that started in October.

A car is a major purchase and its like buying a daily necessity or even new shoes or clothes. So the 2 percent increase might have had an affect of some future car buyers.

Article:

Toyota Motor Corp. said its global production rose 9.0 percent to 845,107 units, the highest output for the month, following an 11.7 percent increase in the previous month and lifted by recovering sales in Japan and China.

Domestic output rose 12.0 percent to 309,582 units, supported by the popularity of its revamped Harrier sport utility vehicle. Overseas production grew 7.4 percent to 535,525 units.

Toyota's global sales in October climbed 8.3 percent to 847,713 units, also a record for the month, backed by solid sales of its luxury Lexus models in China, the world's largest auto market, and a rise in auto demand in the United States.

Ideas and Commentary (Analysis):

As China begins to fully recover there might be even more sales in the future.

But whatever the numbers and statistics say its always about the customer/consumer.

Toyota and other companies can make a fine product that looks good and feels good, but it has to be what customers want.

Marketing should always be the main focus on any company that makes products for customers.

Marketing in this situation is find out what customers want and need and make the best products for them.

Now some would say you need to educate the customer on what a good product is. You need to show them what is a good product such as your product. 

That is not really a good idea. Companies need to find out and know what customers want and need.

A product should be able to sell itself if a company has done its marketing correctly without a lot of bells and whistle selling.

The selling of a product or the sales person, should be only a small part of the process.

Obviously Toyota as done something right in China with the Lexus model. They have identified the needs and wants of the Chinese consumer with the Lexus.

Article:

"The pace of recovery (in production) has been faster than expected," a Toyota official said, adding that the automaker will closely watch a recent global resurgence of coronavirus infections.

Suzuki Motor Corp. said its global production jumped 27.1 percent to a monthly record for October of 304,196 units, benefiting from improving sales in India where the company has a large market share.

Honda Motor Co.'s global output grew 5.7 percent with production in China reaching the highest level for October, while Mazda Motor Corp. saw a 4.5 percent increase due to solid demand for its CX-5 sport utility vehicle.

Ideas and Commentary (Analysis): 

The idea of production increases could be nothing more than the stocking of depleted inventories and or the increase due to logistics problems in the spring and summer and logistics chains were severely strained early on.

And or customers maybe again are feeling optimistic enough to spend on big ticket items like cars, as they were either waiting to feel better about the economy and or waiting for inventory levels to recover from logistics challenges.

Either way its good for the car companies in Japan, and everywhere globally.

Article:

Subaru Corp. logged a 14.0 percent rise in global output, showing a strong increase from a year earlier when the company was forced to cut back production due to a typhoon.

Nissan Motor Co.'s global production fell 15.1 percent due partly to a shift in its focus to profitability from sales volume.

Mitsubishi Motors Corp., a member of a three-way alliance with Nissan and Renault SA, saw a 33.0 percent plunge in global production, while Daihatsu Motor Co., a vehicle-making subsidiary of Toyota, saw a 3.6 percent drop.

In October, global sales of the eight automakers rose 3.5 percent from a year earlier to 2.30 million units.

Ideas and Commentary (Analysis):

The idea of eight automakers is interesting, in that some might think the domestic market is not big enough to support eight automakers?

And correctly so in that all of the Japanese automakers seem to have had some kind of success globally, at least before the pandemic hit.

But here is what is even more interesting about the Japanese auto market; many of these automakers work in some way or another in cooperation with the other automakers, or so it seems.

And all of these eight automakers probably have unique supply chains that work closely with thousands of other companies in Japan, as most large and medium sized companies do.

The former Nissan CEO, name not mentioned as we know who he is tried to pair down Nissan's supply chain relationships.

But I say, whether right or wrong the supply chain relationships is the backbone of Japanese industry and the Japanese economy would not be as strong and stable as it is without these supply chain relationships.

Are there too many? Maybe but the relationships are so intertwined that its like a giant web running throughout most of the Japanese economy.

And what is even more interesting is, maybe so maybe not, some of the automakers are not giants like Toyota and Nissan. They have found a niche and been able to survive as a minnow among giants.

I find that is a unique feature of the Japanese business culture, society and the economy. 

While in the US minnow car makers don't exist and never will.

For sure the Japanese economy is highly competitive but there seems to be many minnows able to grow and survive in some industries in Japan, but of course not all.

Have a nice day and be safe!

Its Still About People: Not just Numbers or Statistics

 Most of the articles I seem to have here in the blog are related to economics and the Japanese economy.

I'm always looking for more articles related to Japanese business and society. 

The ideas of the blog is more than just what is happening in the Japanese economy, but also what's going on with Japanese business and what's going on in Japanese society.

I am reminded by a few things that Dr. Peter Drucker said in some of his books and writings;

While living and working in London he would attend some lectures at Cambridge University by John Maynard Keynes. What he discovered was that he was not an economist, as in the lectures the economists in attendance were always talking about the behavior of commodities and prices but he found what he was interested in was the behavior of  people not commodities.

His interest was always in people and not just numbers or statistics, as interesting as they might be he cared about people. 

In one of the books about Drucker it states "Drucker writes for professionals, managers, and broadly educated people from just about everywhere." 

Another quote from one of the books about Drucker;

"One does not make a difference unless it is a difference in people's lives."

The goal of the blog, hopefully, can evolve into similar ideas.

Have a nice day and be safe!

Japan Restaurant Challenges: People's Lives and Hopes?

 https://mainichi.jp/english/articles/20201126/p2a/00m/0na/005000c

Article:

TOKYO -- In response to the surge once again of coronavirus cases in the Japanese capital, Gov. Yuriko Koike  on Nov. 25 issued another request to eateries here to shorten their business hours.

While some restaurant proprietors lamented that they were being forced to make sacrifices again, or that they could no longer tolerate such measures, others racked their brains over whether or not they should follow the governor's request.

On the evening of Nov. 25 at the restaurant Shimbashi Yukun Sakagura, staff were disinfecting acrylic shields and tables.

The 76-year-old proprietor, Yoko Matsunaga, said of the Tokyo Metropolitan Government's request, "If we don't follow it, we will be given looks of disapproval. Considering the public sentiment, I have no choice but to abide."

Ideas and Commentary:

All governments globally are in a dilemma; how to control the virus situation without causing harm to the economy, or how to keep businesses open and the hope of those who work in places that the government wants to see take more caution such as the closing of restaurants early and other places.

Most likely most business know and understand the present situation but that doesn't make it easier to implement the needed demands such as in Tokyo. 

As Matsunaga states if we don't follow the suggestions of what the Tokyo government wants it might look negatively on our business.

Its a catch 22 situation. If they follow the suggestions exactly how much in revenue or sales will they lose. If they don't what are the consequences exactly?

Article:

However, that does not mean Matsunaga does not feel discontent. Because she has taken careful virus prevention precautions, she wonders, "Why is it always restaurants that are made the subject of these restrictions?" As for the 10 p.m. closing time requested of eating and drinking establishments, she questions how much effect that really has. "Are authorities just trying to give off the image that they're taking effective measures?" she asks.

The 62-year-old male manager of a "standing" bar nearby said, "If small establishments like us can get 20,000 yen (for every day that we follow the restrictions), we're happy to comply." The number of customers has dropped down to one-third the number of pre-pandemic days. "Our regulars are all working remotely and don't go to their offices. I don't think Shimbashi will ever return to the way it was," he said.

Ideas and Commentary:

Matsunaga makes a valid point. Maybe the idea that many of the restaurants in the Tokyo area are small establishments with very close seating and little real ventilation or air flow. And as such a small restaurant with a seating capacity of just 10 or 15 in a small room or building doesn't leave a lot of possibilities to be safe.

And yes, its possible, every globally, governments and agencies might be doing things to show they are working on preventing the virus situation as much as possible. 

And it would of course be good, if at all possible, if the Tokyo government can subsidize every restaurant or business that complies with prevent measures so that they won't go out of business. But again is is possible?

Yes, this is probably, at least in the short term the "new normal" of less customers until things can get back to a more "regular normal."

Article:

Meanwhile, the male manager of a host club in Kabukicho, an entertainment district in Shinjuku Ward, revealed that he was still "mulling over" what to do.

Even if the club were to accept the 400,000-yen (approx. $3,800) financial support from the Tokyo Metropolitan Government, since the hosts earn a lot on commission, the club's income will drop if business hours are cut back. December is usually a big month in which events related to Christmas bring in a lot of business. "I'll make a decision based on trends in the industry," the manager said.

Ideas and Commentary:

The amount that is being offered to help businesses survive the virus situation, while needed, is probably not going to be enough if the virus situation last much longer.

And then there is the idea customers and consumer sentiment. Even if businesses do all the right things it still comes down to how to consumers feel. Are they going to all go back to their normal routines just because a business says it has done all the right things to prevent the virus in their business. 

And of course the virus situation, for some or many businesses has created the need for innovation in the marketplace.

There are no more and more restaurants that offer takeout when they didn't before and offer delivery services when they didn't before, either with their own delivery service or using a new company created during the virus situation that focuses on delivery for restaurants the need a delivery company service.

Article:

Major chain stores are also being forced to make decisions.

Skylark Holdings Co., which is a giant operator of family restaurants such as Gusto, based in the Tokyo suburban city of Musashino, is planning on following the request for shortened business hours at their restaurants in the capital.

Ever since the coronavirus spread across the country, the company has tried to overhaul its corporate plans with the assumption that daytime demand for things that can be enjoyed at home would increase. It already got rid of late-night service in July as a general rule, and a PR representative for the company said that they didn't expect much confusion with the implementation of shorter business hours.

Kushikatsu Tanaka, based in Tokyo's Shinagawa Ward, meanwhile, did not cut back on its business hours at its directly managed branches when the metropolitan government requested that restaurants and other similar establishments shorten their hours in August. There have been confirmed COVID-19 cases among their employees, but the company has emphasized that it has taken very thorough precautions. A company representative said, "Since the number of infected people has been rising, we're not surprised with the (Tokyo Metropolitan Government's) request for shorter business hours. We will be deliberating how to respond."

Ideas and Commentary:

Most likely most business, by now, have implemented many strategies to prevent or contain the virus situation. The ideas of shorter business hours most likely, is not a strategy that some businesses like but comply with. 

If the Tokyo government or the Yokohama government or whomever, have the ability to compensate businesses for the shortened hours then it shouldn't be a problem. But of course it is never really enough to cover all of the losses. 

And at the same time, consumers maybe have decided to limit their outings ether for safety reasons and or some maybe are working in remote locations and as such don't frequent their usual late night eating or drinking places.

It has also been reported that cobinis in the major business areas of Tokyo, where there are large number of office workers, are not doing so good because many are or have been working remotely instead of going to the office. 

Have nice day and be safe!

Japan Supermarkets:

 https://mainichi.jp/english/articles/20201126/p2g/00m/0bu/095000c

Article:

TOKYO (Kyodo) -- Supermarket sales in Japan rose 2.8 percent on a same-store basis in October compared with a year earlier as people continued to stock up on food and other items as they stayed home amid the coronavirus pandemic, an industry body said Thursday.

The monthly sales rise following a fall in September reflected a decline in demand in October last year, when the nation's consumption tax was raised from 8 percent to 10 percent.

In the reporting month, food sales increased 2.7 percent and those of housing-related items including daily necessities, furniture and drugs grew 3.8 percent, the Japan Chain Stores Association said.

Ideas and Commentary:

Consumers, people, families, continue to change their shopping habits related to the virus situation.

Last year, in September, I was in Japan and there seemed to be a shopping spree/frenzy taking place before the October increase in the sales tax from 8 percent to 10 percent. 

During that time was also the Rugby World Cup in Japan so the Japanese were out and about and very happy about how the Japanese rugby team was doing. 

Of course now more consumers/families are not going out as much such as to restaurants. Most likely if they go to restaurants they get take out or delivery and avoid crowds.

However, if you look at the Shibuya crossing YouTube video it looks like a normal pre-pandemic day. But that is one snapshot of what is happening in Japan. 

Someone told me that in Yokohama at the Landmark tower, the number of people out and about was like the pre-pandemic days. 

So maybe consumers are out and about but for some the idea of not going to restaurants might be larger than normal but people are still out and about. 

Article:

Sales of clothing, accounting for 6.6 percent of the total, rose 4 percent for the first increase in 13 months as consumers turned to pajamas and underwear as the weather got cooler, making up for sluggish demand for suits and other business-related items with many people working from home.

On an all-store basis, sales at 10,871 supermarkets run by 56 companies totaled 1.05 trillion yen ($10 billion) in October, according to the association.

The data came amid a resurgence of coronavirus cases in Japan, with national daily counts recently hitting record highs above 2,000.

Ideas and Commentary:

Of course some items will see increase in sales and some items will see decreases in sales. 

As we've reached the Black Friday period and the traditional Christmas shopping season has begun, in most countries, including Japan, it will be interesting to see how much shopping will be done in traditional brick and mortar stores and how much will be done online.

Early reports indicate the Black Friday sales were a record in the US with most of it online of course. 

So it will be interesting to see how Japanese consumers spend this traditional holiday season, mostly online, mostly in regular stores or a balanced combination.

I would venture to say, consumers are people and they want to be out and about during the holiday season as much as possible.

Article:

"With a deterioration in employment and income -- key factors that support spending -- as well as consumer sentiment, there is concern regarding future trends" in supermarket sales, said Atsushi Inoue, a senior official of the association.

Ideas and Commentary:

However, with employment overall not doing so good and income also having challenges, this holiday season might not be the same as previous years. There might be an increase in some areas such as online shopping and necessary good, but most likely not the usual extra shopping that we see in normal holiday seasons.

And consumer sentiment, for the most part is everything. Consumer are not going to go back completely to their pre-pandemic shopping and buying habits until they feel safe, feel their incomes and jobs are safe again, including business all sizes. 

Most likely retailers are on edge and we start to get further into the holiday season, as some years the holiday season can be as much or more than the entire year for some businesses.

And then, as with a previous article about restaurants and early closing times its got be even more of an challenge for them.

Its easy to say businesses need to innovate to meet the new demands of consumer and such, but its possible many business have no room to really innovate or change to survive the virus situation.

How do, for example, travel agencies innovate when there is almost no demand or way less than needed?

How do small businesses innovate when they don't have the resources to innovate and compete?

Not everyone can innovate or change as needed and as such the government needs to step in a help as many as they can to whether the virus storm, if its not too late for some businesses. 

Have a nice day and be safe!

Japanese Economy News:

 https://mainichi.jp/english/articles/20201125/p2g/00m/0bu/131000c 

Article:

TOKYO (Kyodo) -- The government on Wednesday retained its view that the Japanese economy is "picking up" in its assessment for November, but it also warned of downside risks from the global resurgence of coronavirus infections.

In its monthly report, the Cabinet Office downwardly revised its view of capital investment, among other components, with the pandemic clouding the business outlook. Meanwhile, the assessment of production was upgraded due to the gradual resumption of economic activity.

Ideas and Commentary:

The government, most governments, want to provide a positive outlook as much as possible. However, just what does "picking up" really mean? An economy is very complex and as such there are always positives and negatives even when an economy is growing. 

Not to be negative or pessimistic but "picking up" can mean one part is growing but there might be other parts still with challenges.  

Downside risks are always in an economy, but of course even more now. Especially as in recent weeks there have been a new wave, wave 3 of the virus situation.

Capital investment is very much dependent on business sentiment, meaning how businesses feel about now or the future. 

Businesses mostly likely are going to take a "wait and see" approach regarding future conditions. Economic and business conditions were showing signs of improvement during the summer but have don't seem to be a good.

The idea of production increases might be related to increases in global trade and we see some increases globally. But again with the recent surge in virus cases, production increases might begin to be challenged.

Article:

The economy "is still in a severe situation due to the novel coronavirus, but it is showing movements of picking up," the office said, using the same wording for the fifth straight month.

Looking ahead, it said the improvement will continue, but added that "full attention should be given to the further downside risks" to the domestic and overseas economies due to the pandemic.

The office issued similar warnings in March and April when the economy was under pressure from the initial impact of the pandemic. Japan declared a state of emergency in early April and fully lifted it in late May.

Ideas and Commentary:

Yes again governments wants to appear positive so they often choose words and phrases that signal something positive instead of always sounding negative. 

But again just what are those movements and where to be more specific. But to be fair to government reports, again an economy is a very complex organism, meaning you have some real positive movements in some parts of an economy and at the same time some real challenges in other areas of the economy.

So for example, we can have real positive movements in the production or manufacturing of cars as there is an increase in global demand but at the same time have some real challenges such as in tourism, airlines, and restaurants where consumer demand has really decreased because of the virus situation.

So anytime we see or hear some economic or business news we need to look at the big picture and really see what is happening in an economy. 

Article:

"Domestically, private consumption of food services and travel is facing such downside risks, while exports could be affected by resurgences of infections overseas, especially in Europe," a Cabinet Office official told a press briefing.

The evaluation of capital expenditure was cut for the fifth time this year. It is "decreasing recently," according to the office, which said last month that business investment was "showing weakness."

The report upgraded the view of industrial output for the first time in two months, saying it is "picking up." The official cited solid demand for cars both at home and abroad.

The report left its assessments of other major components unchanged, including private consumption which it said is "picking up".

Ideas and Commentary:

Its not a surprise that that domestic spending is down in food services and travel. I often check or look at the Haneda domestic arrivals and departure flights on the Haneda airport web page and I see many flights arriving and departing and some flights that are cancelled. 

But of course the question is what is the capacity of the flights; 10%, 30%, 50% etc of capacity? But at least they are flying, but of course we have to guess they are not at 100% capacity. I don't even bother to look at international flights as its too depressing.

ANA in the spring said they were not going to do layoff but instead a reduction in salaries and hours. But just recently they seemed to have changed their mind as the virus situation drags on.

However, as the news of potential vaccines are in the news, and Qantas in Australia has suggested that travelers in the future might have to have a vaccination before being able to travel.

Regarding the food industry, the virus has forced many food services places to think about changing their way of doing business and or adding more take out services and now even delivery services to meet the demand of consumers who don't want or can't go to food service places because of the virus situation.

Many places that didn't have delivery services have now expanded into delivery with new and innovative delivery companies that have begun since the virus situation as been on going.

In South Korea, for example, restaurants don't have to have their own delivery workers. All they have to do is to have an app from a delivery company, that comes to the restaurant, picks up the food order and takes it to the customer. 

Again capital investment is very dependent on business sentiment or feeling about the future. As the virus situation continues on businesses will continue to be pessimistic. 

However, what we've seen globally is a surge in stock markets and news about the possible vaccines globally beginning to show real promise. 

But the real question is how soon can the vaccines be used in each economy and then will we seen a decrease in the virus situations.

Businesses are not going to really feel positive until they know and feel consumers/customers whether business customers or family customers feel things are getting somewhat back to normal.

However, as I watch the Shibuya crossing everyday on YouTube if foot traffic is anything, people are out about about everywhere in Japan. 

But unfortunately the virus situation continues to surge, and even the Go To Travel program is not doing so good. 

Have a nice day and be safe!

Japan Consumer Price Index:

 https://mainichi.jp/english/articles/20201120/p2g/00m/0bu/034000c 

Article:

TOKYO (Kyodo) -- Japan's core consumer prices fell 0.7 percent in October from a year ago, marking the sharpest decline in over nine years, weighed down by a domestic tourism-boosting subsidy program and weak energy prices amid the coronavirus pandemic, government data showed Friday.

The decline in the core consumer price index also came as it lost momentum in year-on-year terms, over the past year driven by a sales tax hike from 8 percent to 10 percent implemented in October 2019, according to the Ministry of Internal Affairs and Communications.

Ideas and Commentary:

The core consumer price index can sometimes be a very complicated index because so many factors can be involved in related to consumer behavior and buying patterns and reasons.

The tourism related boosting subsidy may seem like a good thing the help stimulate consumer spending especially when there are external and internal factors both in play at the same time. 

But any time there might be a subsidy, that in reality might actually have the potential to reduce real spending as consumers are relying on the subsidy to spend and not relying on their own income. 

So if they are waiting for the subsidy consumers may actually reduce spending until they get the subsidy.

And early reports indicate many families and consumers and even businesses were not getting the subsidies because of government red tape and other challenges.

The sales tax a year ago is still being talked about as it is even now causing challenges. In 2014 the sales tax affect actually only last about one quarter and then consumers were back to their normal spending behavior. It seems a little unfair to blame the 8% to 10% sales tax increase as the probable cause of continued decreases in consumer spending.

Article:

The core CPI -- excluding volatile fresh food prices -- dropped for the third straight month and economists expect prices to remain weak, reviving fears of Japan slipping back into deflation despite the Bank of Japan's massive monetary easing program.

The index last marked a 0.7 percent slip in March 2011, when a massive quake and tsunami struck northeastern Japan.

Ideas and commentary:

Japan it seems, is always in a period of deflation, at least recently. Deflation and inflation, in and of themselves are not the real problem. 

Who doesn't want lower prices, at least at the consumer level. Of course businesses would prefer higher prices for the potential for more revenue and profits.

But in reality there has to be a balance between the two. It can't be all deflation and it can't be all inflation. A growing stable economy needs a balance between lower prices and higher prices, not one or the other. 

But the Bank of Japan realized the Japan economy was more deflation than inflation, and made it their goal to try and reach a 2% inflation rate. The 2% goal is/was a balance between continued low prices and potential inflation.

Inflation in itself is not a problem, as it can indicate there is more continued demand in the economy. More demand indicating more overall economic activity The problem begins when the rate begins to edge above 4% and then certain parts or groups in an economy begin to suffer from prices that are too high. As such many central banks try to maintain a balance between 2 and 4 percent. 

Of course the BOJ has come out many times recently that its 2.0% goal is not working despite is attempts with massive monetary easing.

Of course the pandemic has not helped and of course may it worse as consumers cut back on spending in many areas in the economy.

Article:

"The fall looks big because of the 'Go To Travel' campaign and the petering out of the tax hike impact," said Yasunari Ueno, chief market economist at Mizuho Securities Co., adding that the underlying trend for the CPI is weak.

The government may be in a dilemma because the discount campaign is aimed at reviving demand and the economy but it negatively affects prices, according to Ueno.

The program, launched in July to partially subsidize Japan residents' domestic travel expenses, has been a drag on the CPI in recent months.

Ideas and Commentary:

Yes the "Go to Travel" campaign seems like a logical step to help revive consumer spending, but the pandemic has essentially reduced travel and spending to level that maybe the campaign can't overcome, at least for now.

The campaign might have added some incentive but at the same time it might have hurt some the economy. There have been reports that the campaign was not really benefitting all businesses and it seemed to only be benefitting a small and select group of businesses. 

As such those who it hasn't really benefitted maybe over the course of the pandemic have been forced to reduce prices as demand falls.

And consumers are looking for bargains in the economy will gravitate to those businesses that promote the campaign subsidy and avoid those who don't and in reality don't spend the extra needed income needed in the economy to show actual demand which helps in raising overall prices in the economy.

Article:

Starting in October, the tourism-boosting scheme was expanded to cover trips to and from Tokyo, the only place that had been excluded due to its relatively high number of coronavirus infections.

Accommodation fees plummeted 37.1 percent from a year ago, following a 30.0 percent slump in September.

Last month, the BOJ lowered its CPI forecast for fiscal 2020, projecting a 0.6 percent year-on-year fall, far from the bank's 2 percent target. Governor Haruhiko Kuroda has dismissed the idea of the travel initiative affecting overall price trends, saying its impact is limited to certain sectors.

Ideas and Commentary:

Yes, there maybe be many factors affecting the decrease in the CPI including hotel prices decrease for multiple reasons; low demand due to the virus situation, people not wanting to travel, and only going to hotels that are able to use the campaign. And as such other hotel not getting their share of visitors.

And then news reports of some consumers or whomever, taking advantage of the campaign by booking many hotels at the same time, getting the subsidy and not really staying at the hotels, as some news reports have indicated.

The travel campaign like Kuroda as indicated is surely not the main problem. The main problem of course is still consumers are still weary to travel and the campaign was not implemented evenly or even fairly for all businesses in the economy. But to be fair and honest consumers are going to go to where they want to go, despite any campaign. 

Article:

"When policy support is mainly aimed at preventing the economy from collapse, demand remains subdued and the CPI is expected to be in negative territory for a while," Ueno said.

Despite the lingering effect of the pandemic, Japan's economy rebounded in the three months to September from its worst contraction in the April-June quarter when activity was depressed by a state of emergency over the virus outbreak.

Ideas and Commentary:

Yes economic support is important. But the problem is without the intended support, the economy may have been even worse. CPI might have been worst. Its always better for policies and strategies that actually help release the full potential of the economy. 

Some policies while needed to help support and economy don't actually create incentives for an economy to reach it full potential. 

Its not that the policy or strategy is wrong but other factors, and in this case the pandemic has been too much for any or policy or strategy to fully revive an economy.

Article:

Crude oil prices were pushed down in October as the virus outbreak has raised concerns about economic growth. Kerosene prices sank 13.6 percent and those of gasoline 9.2 percent, according to the internal affairs ministry data.

"Energy prices may recover but the Go To campaign will be in place for a while. So we will carefully watch how prices will move overall," a government official said.

Ideas and Commentary:

Oil and energy prices can be both a positive and a negative. Energy prices are a catch 22. While consumer, being families and businesses that are the end users of energy supplies might want lower prices. The suppliers of energy might want higher prices overall for their revenues and profits.

But at the same time, suppliers might get lower prices when they bring the energy supplies to the consumers but they don't "pass on" the lower prices to consumers sometimes and they feel the need to keep their costs down while maintaining the same prices for their consumers.

Article:

The travel subsidy program is scheduled to end in January, but the government is considering extending it beyond that month.

So-called core-core consumer prices, which exclude fresh food and energy items, shed 0.2 percent from a year earlier, the first decline in two months.

Ideas a Commentary:

Again the travel subsidy can be both a positive and a negative. It might benefit some businesses and consumers but not all. And it might actually reduce some consumer spending as consumers seek out the subsidies and depend on the subsidy and not spend their extra income needed for increased demand in the economy. 

But some spending, in this pandemic situation might be better than nothing. The only challenge is, even in a normal economy, there are those who benefit and those who don't. Some businesses do better than others and some don't see the benefits that other businesses do.