Japan Household Spending:

 https://mainichi.jp/english/articles/20211008/p2g/00m/0bu/019000c

Article:

TOKYO (Kyodo) -- Japan's household spending fell a real 3.0 percent in August from a year earlier, as the government expanded a state of emergency over the coronavirus pandemic due to an infection resurgence, government data showed Friday.

Average spending by households with two or more people in real terms was 266,638 yen ($2,400), following a 0.7 percent rise in July, according to the Ministry of Internal Affairs and Communications.

Seasonally adjusted spending in the reporting period fell for the fourth consecutive month, down 3.9 percent from July.

Ideas:

Just what does household spending include if the average spending with two or more people was 266,638 yen? Does it include housing payments such as a mortgage or rent for the home or apartment?

Does it include all of the energy expenses such as gas, electricity and so on?

Does include anything extra such as medical expenses or insurance costs?

And does it include expenses outside the home such as going to department stores, restaurants and so after the regular monthly bills are paid?

Of course mostly likely no household is going to spend 266,638 on incidental spending such as shopping, restaurants, etc.

Of course household spending probably includes spending on food bought as supermarkets for use at home.

Article:

With a resurgence of coronavirus infections driven by the highly contagious Delta variant, the most recent virus emergency was effective throughout August in Tokyo and the southern island prefecture of Okinawa, after being declared there in mid-July and late May, respectively.

The measure was repeatedly expanded to cover 21 out of Japan's 47 prefectures at the end of August. With requests for people to stay at home and restaurants and bars to stop serving alcohol and close early, the emergency dampened consumer spending. It was fully lifted last week.

"In August, coronavirus infections spread throughout the nation at a record-breaking pace, which limited opportunities for many people to go out and led various shops to lose their customers," a ministry official told reporters, adding that heavy rain and low temperatures also suppressed consumption.

Ideas:

So now the idea is about consumer spending and not household spending. And yes, most likely consumer spending decreased in August because of the surge in the new variant.

And then there are always some other factors or variables that can effect consumer spending such as listed heavy rain and low temperature.

But, just to talk, how might low temperatures in August effect consumer spending? Was there less customers or tourists at beaches? Of the mountains?

The weather always plays a part in the price of fruit and vegetables. As mentioned in another article the weather has caused an increase in prices of some fruit and vegetables.

So most likely the higher prices of fruit and vegetables because of the rain, reduced some consumer spending on those products.

And or because of the low temperatures, some products that might usually be bought in the hot August period were not bought because it didn't feel like a normal August and customers didn't want to buy some things, such as maybe suica or watermelon?

Article:

Compared with the same month two years ago, before the pandemic, spending was down 9.5 percent, according to the official.

By category, food costs slid 3.2 percent from the previous year as the virus emergency caused spending on eating out to plummet 13.4 percent.

Meanwhile, demand for ready-made meals increased as many people are believed to have cooked less as they watched the Tokyo Olympics, held from July 23 through Aug. 8, on television, the official said.

Ideas:

No doubt spending was down two years ago before the pandemic. It has to be remembered that there are many Japanese without jobs or even working on temporary or contract jobs, which might be part of the reason for the decrease in consumer spending.

In relation to food costs is it the costs that consumers have to pay, as demand was down, and as such some places reduced their prices to reflect less demand. With a 13.4 percent decrease in spending on eating out, some places might have decreased their prices as an incentive to get customers to return.

But the problem with that, as has been in the news lately, supply cost have been increasing the past year and as such many restaurants and places now have thinner profit margins.

And then add into that a 13.4 percent decrease in consumer spending may have hurt restaurants and other places even more.

But there are always positives and negatives in any economic situation. Unfortunately while restaurants might be losing customers, the companies that make ready-made meals have probably seen a huge increase in business during the pandemic period.

But what is going to happen as the emergency measures are lifted? Are consumers going to buy ready-made food only or are they going to go back to their usual restaurants and places they frequented before the pandemic?

Article:

Transportation and telecommunication expenses saw a 3.4 percent drop, with car purchases sluggish as automakers were forced to reduce output amid a global semiconductor crunch as well as virus infection surges in Southeast Asia that hit car parts suppliers there.

Outlays for culture and recreation dropped 3.9 percent.

Outlays on accommodation plunged 34.4 percent, with spending a year earlier having been bolstered by a state-subsidized "Go To Travel" campaign launched a month earlier to boost the virus-hit domestic tourism sector. The promotion was suspended nationwide in December amid the spread of COVID-19.

Ideas:

Car purchases of course were less due to the chip situation and most likely a drop in supply to sell in Japan.

If telecommunication expenses are related to the buying of new smartphones, then that can be attributed to the governments push for Docomo and others to reduce the fees that customers to pay monthly so the monthly fees customers have to pay saw a 3.4 percent drop.

Expenses for culture and recreation no doubt dropped in August as people refrained from going out and doing things because of the virus surge.

And then the ongoing challenges of the domestic tourism industry. Its not even worth mentioning the international tourism industry as its all but dead at this time.

A 34.4 percent drop from a year earlier when the "Go to Travel" campaign was in full swing shows tourists last summer were taking advantage of the lower prices related to the campaign.

And then add in the surge in the virus situation in August and then less spending on domestic tourism during the Obon season.

Article:

The average monthly income of salaried households with at least two people in August rose a real 5.4 percent to 555,009 yen.

It had declined for the third successive month in July, mainly due to the adverse impact of the government's across-the-board cash handouts of 100,000 yen per person last year to ease the economic impact of the pandemic.

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

Ideas:

The average monthly income of 555,009 might seem like a lot for some, but its just an average, meaning, as we don't know the dispersion or what is the difference above and below the average.

And it has to be remembered there are still a lot of people without jobs in Japan now because of the pandemic. 

There are some who probably wish they had 555,009 for their monthly income at this point in the pandemic.

Consumer spending is the largest part of a country's GPD in most advanced economies. Unfortunately for Japan, consumer spending, it seems, never reaches its potential or a better way to say it maybe it should be more than 50 percent of Japan's GPD.

In some countries it as much as 60 percent or higher. So maybe the Bank of Japan would like to see consumer spending  more than 50 percent.

Part of the problem might be some economic structural problems in the economy and society.

For example, it is estimated that maybe 30 percent of all jobs in Japan now are either contract, temporary, or part-time type jobs which have less salaries and less benefits.

And there is the challenges related to women in the workforce. Most likely they work in most of the 30 percent of the low wage and low benefit type jobs.

And then add in reluctance of companies to increase wages to workers in their companies. The Bank of Japan has been trying for now seven years to try and get companies to raise salaries high so that the workers, who are consumers, can feel good about their salaries and and now have some extra income or disposable income to spend in the economy.

So you add in the 30 percent temporary job challenge, the women in the workforce challenge, and then no salary increases for workers at many companies and it makes the Bank of Japan strategy to increase inflation to 2.0 percent almost impossible.

And of course the pandemic has not helped with even less spending or less demand in the economy. 

Have a nice day and be safe!