Japan Household Spending:

 https://mainichi.jp/english/articles/20210205/p2g/00m/0bu/041000c

Article:

TOKYO (Kyodo) -- Japan's average monthly spending by households in 2020 fell a real 5.3 percent from the previous year, marking the sharpest drop on record, as people refrained from going out due to the novel coronavirus pandemic, government data showed Friday.

The decline was the largest since comparable data became available in 2001, according to the Ministry of Internal Affairs and Communications.

Monthly household spending with two or more people averaged 277,926 yen ($2,600) last year, it said. The figure had increased a real 0.9 percent in 2019 following a 0.4 percent fall in 2018.

By category, declines in outlays for culture and recreation contributed most to the overall drop, diving 18.1 percent, while spending on transportation and communication fell 8.6 percent as consumers shied away from face-to-face services.

The government declared its first state of emergency in April last year for some prefectures, later expanding it nationwide, requesting people to stay home and some businesses to temporarily close or cut operating hours. It triggered the worst recession on record for the world's third-largest economy. The emergency was fully lifted in late May.

Household spending showed a record drop of a real 16.2 percent from a year earlier in May.

Although the economy has picked up since, a resurgence in infections since mid-November has been clouding the outlook, with Prime Minister Yoshihide Suga declaring a second emergency last month for Tokyo and some other areas. It will be effective until March 7, having been extended by one month from the original end date.

For December alone, average household spending stood at 315,007 yen, down a real 0.6 percent from a year earlier for the first decrease in three months.

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

Ideas:

The key word here is average, meaning there were those who spent more and those who spent less. So unless we really know the mean and the difference above and below or how many households were above and how many were below and what really was the average of those above and what really was the average of those below, we might not be seeing the clear picture of Japan's average monthly spending by households.

The reason for this is the possibility that the average could be skewed, in that there might have been a lot of high income groups who were spending a lot, not too worried about prices or the pandemic and or a for the low income groups or even middle income groups they might have spend even less.

Both of these possibilities could skew the results in either direction which means the average or mean is really not a true or clear picture of what is really happening.

Of course by category the decline in culture and recreation would have seen a large decrease because of the pandemic.

We can or should include any activity that required face-to-face contact, such as restaurants, hotels, retail stores, or any type of service business where people went as customers.

But there might be a another side of the story and we don't hear or see anything about online shopping. 

Online shopping can include anything from Amazon, for example, or any business that has established itself online. 

Including supermarkets, restaurants, fast food places, and which might have take out services and or delivery services.

And then any kind of business, such as fashion stores like UNIQLO, which might have a strong presence online.

Of course many small shops might not have an online presence, and such, they might be able to offer some kind of delivery service.

In this instance, they could or should partner with logistics companies and or even convenience stores which sometimes are used as pickup points near where some customers are.

Especially if a small or medium sized retail or service type business has a large and loyal customer base, and they can partner with  logistics companies to either deliver to the customer's home and or to a conbini near where the customers lives to avoid face to fact contact as much as possible.

Consumer spending has always been a key indicator related to Japan's GDP. 

And the Bank of Japan, has for many years been trying to increase consumer spending, which could help increase overall inflation in the economy.

The BOJ has a target of increasing inflation to 2.0 percent but has not been successful in achieving that goal, as inflation, for the most part, has remained at or below 1.0 percent.

Inflation can be both a positive and a negative.

Most central banks would like to see inflation between 2.0 and 4.0 percent. 

The figure if inflation is kept at this level there is good amount of economic activity in an economy and a good amount of money circulating through the economy.

But if inflation is below a target rate of 2.0 percent, perhaps an economy is not operating at its fullest potential for a variety of reasons, which could reduce economic growth, might reduce some business from growing.

If inflation begins to increase above the level, the central banks are concerned that now there might actually be too much economic activity which is driving up prices beyond what the economy can handle.

For example an inflation rate of 4.0 might lower the spending of some groups who now can't handle the higher prices of whatever.

If even can affect businesses who need raw materials or supplies for their business and now they have to think about where to get the same quality of supplies if their regular source of supplies has become too high for them.

But right now the Bank of Japan is probably not too focused on its target rate of 2.0 percent as its more concerned with helping the overall economy survive along with helping small and medium sized business to survive.

Have a Nice Day and Be safe!