Japan July Household Spending:

 https://mainichi.jp/english/articles/20210907/p2g/00m/0bu/024000c

Article:

TOKYO (Kyodo) -- Japan's household spending rose a real 0.7 percent in July from a year earlier, up for the first time in two months following a steep drop a year ago, but the pace of increase was slow amid a resurgence of coronavirus infections, government data showed Tuesday.

Average spending by households with two or more people was 267,710 yen ($2,400), the Ministry of Internal Affairs and Communications said, rebounding from a 7.6 percent plunge a year earlier.

Ideas:

Consumer spending or household spending may have increased some but its a long way from where it should be. Consumer spending always seems to be the Bank of Japan's number one focus and they are always trying to get inflation to their 2.0 percent goal.

Consumer spending most likely might never be where it should be. And it might take some time before it gets back to the pre-pandemic level, which even was not at its potential in the 3rd largest economy in the world.

Back in the fall of 2019, consumer spending appeared to be in somewhat of a feeding frenzy, meaning with the pending sales tax increase on October 1, it seemed like everyone was spending frenzy to beat or overcome the sales tax increase.

And then add in the 2019 Rugby World Cup at the same time and you had even more spending.

Who knew that eight months later everything would change, and most of it for the worse.

Article:

"The increase was quite small, so it would be better to regard it as almost flat compared to the previous year," a ministry official told reporters, citing a resurgence of infections and the government's fourth virus state of emergency for Tokyo as possible reasons for the limited growth.

The increase followed a revised decline of 4.3 percent in June. The figure was revised from a 5.1 percent fall following a change in the calculation method for the consumer price index released by the ministry.

Ideas:

Yes, a real 0.7 percent increase doesn't seem like much and maybe it should be considered as almost flat or no gain at all in consumer spending.

What doesn't seem the written or talked about much is what about the amount of online spending compared to consumer spending at brick and mortar places, whether restaurants, retail stores, etc.

Of course the amount of online spending might not be as much as brick and mortar spending but it would be interesting to see just how much consumers are spending online as many are not willing to venture out and shop in the stores.

The online spending could be related to retail stores, maybe ordering takeout or deliveries for meals etc. Or even maybe at some supermarkets that have online shopping platforms or even now 7/11 that deliver or of course all of the MacDonald's, and Moss Burger delivery services.

Article:

Amid a surge in new virus cases driven by the highly contagious Delta virus variant, the ongoing state of emergency was declared in mid-July for Tokyo, while the southern island prefecture of Okinawa has been under a state of emergency since late May.

Consumer spending is reduced under the emergency regulations as people are requested to stay home and restaurants and bars are refrained from serving alcohol and must close by 8 p.m.

Ideas:

Yes, restaurants are asked to close early and ask to not serve alcohol, but it has been reported recently that up to 40 percent of restaurants in the Tokyo entertainment areas are not following the suggestions as they say they can't survive if they close as most if not all of their sales come in the late evening hours.

And then there is still the idea of how many consumers who are not spending are worried about their futures and jobs and not just about the virus situation, but of course is related to many who might have lost their jobs and or the company or industry they work in is not doing too good.

As the pandemic continues on most likely more and more restaurants and other places are going to ignore the suggestions of the Japanese government as they can no longer afford to stay closed or not have business as usual.

And maybe even the same with retail stores or even department stores, as they can no longer afford to lose customers and sales as the pandemic is now in its 16 month.

And then add in as more and more people/consumers become vaccinated maybe some businesses might think its now safe to get back to "business as usual" as they can't afford any more lost sales or lost customers.

And then add in the competition factor, as they see other businesses starting to remain open for all hours and they might feel they are losing too many customers and sales to the competition that has decided to get back to business as usual.

Article:

On a month-to-month basis, seasonally adjusted spending in July fell 0.9 percent for the third consecutive month of decline, with the official saying that household spending "has yet to recover to pre-pandemic levels partly due to a virus resurgence."

The average monthly income of salaried households with at least two people in July fell a real 2.2 percent to 668,062 yen, down for the third month in a row, mainly due to the government's across-the-board cash handouts of 100,000 yen per person last year to soften the economic blow of the coronavirus.

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

Ideas:

Most likely, related to the 100,00 yen per person some of it was spent and some of it was saved. 

Consumer spending or household spending as mentioned earlier might not recover for the rest of 2021.

As more and more people become vaccinated and if the variants continue to decline and the number of daily cases begin to see significant declines people/consumers over time might begin to venture out more and more.

But a very important factor seems to be sometimes the media, in the 24 hour news cycle, keeps reminding people over and over how many new virus cases there are every hour of the day.

That can't be good for the feeling of people as they keep hearing it over and over. Of course the media is doing a public service keeping everyone informed with a lot of good and important information.

But it might not be good for the overall economy and business as it scares consumers away and they don't go out and visit restaurants, retail stores, supermarkets except for their basic needs including department stores.

But at the same time maybe some consumer eventually are going to tune all of that out, some not all and just get back to "life as usual" as much as possible.

Consumer spending is estimated to be about 50 percent of Japan's GPD and as such because its as much as 50 percent of GPD, the idea that maybe exports, which are now doing quite well and the idea that business capital spending and investment is also significantly increasing can't be relied on to the carry the Japanese economy.

For the Japanese economy to fully get back to the pre-pandemic level consumer spending also has to show significant increases. A 0.7 percent increase is not a significant increase. 

Have a nice day and be safe!