Japanese Govt. View of Economy:

 https://mainichi.jp/english/articles/20210719/p2g/00m/0bu/047000c

Article:

TOKYO (Kyodo) -- The Japanese government on Monday maintained its view that the country's economy has seen increased weakness in some sectors in its latest monthly economic assessment, as measures to curb the spread of the coronavirus continued to weigh on consumption in July.

The economy is showing "further" weakness in some components and remains in a severe situation due to the pandemic, the Cabinet Office said, employing the same wording for the third straight month after downgrading the evaluation in May.

Ideas:

Consumer spending in the Japanese economy is not what should be, and  of course the pandemic continues to constrain the amount of consumer spending that is needed in the 3rd largest economy in the world.

That doesn't mean there is not any consumer spending, it just means its not at the level it should be.

And even in normal times, without the pandemic, consumer spending in the Japanese economy was didn't seem to reach its potential.

That means the Bank of Japan's goal of reaching 2 percent growth or an increase in inflation is a long way from becoming a reality.

Exports might be growing, but exports are only part of the economy. Most likely services now are a larger part of the Japanese economy. As some estimate the exports are no more than 20 percent of Japan's GPD.

While consumer spending might be as much as 50 percent of Japan's GPD.

Article:

The government's latest view on the overall economic situation came after Tokyo entered a fourth state of emergency over the pandemic July 12 due to a surge in COVID-19 cases following the end of the third emergency late last month.

The office retained its view on private consumption, saying it "has shown further weakness recently, especially in services spending."

A government official told reporters that the office gave up on upgrading the evaluation for consumer spending after seeing it worsen this month.

Ideas:

As some sources in Japan has mentioned to me, if you look around or go to places that might potentially have a lot of people, they are everywhere out and about doing things. But how much are they spending, for example, compared to before the pandemic.

Services spending most likely has been hurt the worst in the pandemic, as services can be anything from hotel, airlines, restaurants, or anywhere business provide things for people besides consumer products.

But you can even include retail shopping in this category, at least in stores, as people come in contact with people, while consumers might be everywhere, are they spending like they did before the pandemic.

For example, as sources have indicated, Landmark Tower in Yokohama might have a lot of people on the weekends, but how much are these consumers spending compared to before. 

Article:

"Especially, spending on entertainment-related activities picked up in late June. But this month, consumption became sluggish again as a whole, so we ended up maintaining the assessment," the official said.

With a ban on restaurants and bars serving alcohol, the virus emergency will last until Aug. 22 for the capital and the southern island prefecture of Okinawa, covering the entire period of the Tokyo Olympics from Friday through Aug. 8.

The prefectures of Chiba, Saitama and Kanagawa surrounding Tokyo as well as Osaka Prefecture are under a quasi-emergency through Aug. 22 that allows serving alcohol until 7 p.m. as long as certain COVID-19 precautions are in place.

Ideas:

Consumer spending most likely will remain sluggish or not grow much, or if any at all. 

Japan, for many reasons before the pandemic, has had challenges with consumer spending being at is potential.

But after seven years of not so good results, maybe the Bank of Japan should re-consider the idea of a 2 percent inflation rate, as not really feasible in Japan.

While other countries appear to be on the verge of increased inflation, Japan, at the moment is the exact opposite.

But that might be a good thing, for some people. If prices of regular everyday products such as eggs, milk, bread, some vegetables, meat and fish begin to rise too much during the pandemic it might begin to affect too many people, especially the fixed income elderly, and or struggling families who lost their jobs.

So the Bank of Japan maybe shouldn't be overly concerned with inflation and try more, and no doubt they are, help struggling families and businesses get through the pandemic.

Article:

By component, the office upgraded its view on corporate business sentiment, saying that it shows "movements of picking up, although some severe aspects remain." The official cited the Bank of Japan's Tankan quarterly survey released earlier this month, which indicated improved confidence among major companies.

Assessments of other major components were unchanged. The report said that exports "continue to increase moderately" and that business investment and industrial production are both "picking up."

Looking ahead, the office used the same wording as the June report, saying the economy is expected to continue picking up as the government accelerates its vaccine rollout, but warned that "full attention should be given" to the impact of the pandemic on domestic and overseas economies.

Ideas:

Improved confidence among major companies is good and needed. While all economies are made up of small, medium and large sized companies or the major companies, which have the most most revenue and sales, they should not be considered the only part of the economy that is important.

As balanced economy, lets say like Germany, where all the companies are equally important no matter they size.

And yes, in the Japan, as elsewhere, the largest companies always get the most attention.

But if you look at the entire economy and the total number of companies the larger companies in reality are jus a small part of the economy. 

The bulk of any economy, and especially the Japanese economy is the small and medium sized companies that never get in the news and never will. 

But yes, its important to know and understand what the large companies think and feel as again, sometimes they provide the bulk of investment in the economy. 

The feeling of the large companies might be improving but again, what about the mood of the small and medium sized businesses and what do they think about the future of the economy.

Most likely its the small and medium sized businesses that are having the most challenges related to the pandemic situation as they probably don't have the resources needed to overcome the pandemic or keep going during the pandemic.

Have a nice day and be safe!