Japan's Industrial Output: Updated Dec. 17

 https://mainichi.jp/english/articles/20211130/p2g/00m/0bu/039000c

Article:

TOKYO (Kyodo) -- Japan's industrial output in October rose 1.1 percent from the previous month for the first increase in four months on the back of increased production by the automobile and machinery industries, government data showed Tuesday.

The seasonally adjusted index of production at factories and mines stood at 90.5 against the 2015 base of 100, the Ministry of Economy, Trade and Industry said in a preliminary report.

The ministry, however, retained its basic assessment since August that industrial production "is pausing."

Ideas:

The Japanese economy, like any economy, always goes through periods of positives and negatives and rarely is there an economy or sectors in an economy that have all positives or even all negatives as the business cycle is full of positives, negatives, and even periods of pausing and slowing down.

Manufacturing is a very important part of the Japanese economy but it must be remembered that its not the entire Japanese economy. While being very important, most likely in the 21st century the services economy might actually be bigger. 

In terms of economic activity the manufacturing sector is still a large part, but overall, most likely the service sector or sectors, as there many different part so the service sector might actually be much bigger.

Japan has always considered itself a manufacturing power, which it is, but more importantly now might be the service or a better term might be the services sector, as it involves many different kinds of businesses.

Article:

Among the eight industries marking month-on-month growth, production rose 15.4 percent for automobiles and 4.2 percent for production machinery including semiconductor manufacturing equipment.

"Due to an easing of materials and parts shortages, output in October turned upward," a METI official said.

Among the six industries logging a decrease in production, inorganic and organic chemicals posted a 3.3 percent contraction.

Ideas:

And even in the manufacturing sector there are many different kinds of manufacturing companies. As such there are always going to be some that see production increasing and some that see production slowing down, and some that might be production decreasing from the previous year. 

Again even the manufacturing industry goes through business cycles of positives and negatives. So whenever the index numbers are presented they have to be taken with a "grain of salt" meaning in this case it doesn't mean every company was positive or every company was negative of even every company saw production slowing down or pausing.

Just like the overall economy, there are some areas that are positive and some that are negative and nothing ever stands still. 

And as the pandemic continues on globally and in Japan most likely, even the manufacturing industry which come back much faster the the services area, is still going to see periods of pausing and periods of not what it should be still as the pandemic related situations will continue to affect many different industries most likely well into 2022.

Article:

Looking ahead, METI expects output to grow 9.0 percent in November and 2.1 percent in December, citing a poll of manufacturers.

The official also said the Omicron variant of the coronavirus seems to have had no impact on production so far but that it is unclear how it will affect output in December and beyond.

The official said it is necessary to monitor the variant's possible influence on supply of parts and materials, among other factors.

The index of industrial shipments increased 2.0 percent to 88.3 while that of inventories was up 0.8 percent at 98.9, according to the data.

Ideas:

The pandemic and the omicron situation is a area of concern for manufacturing just like the delta variant was in the summer. Who knows what can happen with the new variant related to affecting supply chains, shipping and manufacturing companies in Southeast Asia. 

Now is not the time to say all is well and just like what happened in the summer the pandemic variants can strike and again cause major disruptions in global supply chains.

For example, an immigration official at the Kansai international airport, who had no contact with anyone flying into the country contacted the omicron variant. So who knows right now who exactly is safe and how fast or how it spreads can most likely easily do what the delta variant did in the summer.

As such global manufacturing and global supply chains again might affected just like they were in the summer.

Have a nice day and be safe!

Japan PM Encourages Companies To Increase Wages: Updated Dec. 16

 https://mainichi.jp/english/articles/20211126/p2g/00m/0bu/058000c

Article:

TOKYO (Kyodo) -- Prime Minister Fumio Kishida said Friday he hopes businesses that have recovered to pre-pandemic levels will raise employee wages by more than 3 percent next spring as he tries to realize a virtuous cycle of economic growth and redistribution of wealth.

Kishida made the remarks during a meeting on putting his vision of a "new capitalism" into motion and was joined by the leaders of three major business lobbies as well as Rengo, Japan's largest labor organization, formally called the Japanese Trade Union Confederation.

Ideas:

Suggesting or asking companies to increase wages as a way to redistribute the wealth is a novel or good idea. But if companies have not done it recently or for a while its going to take more than a suggestion for them to increase wages.

Another article already posted for later gives some ideas that the Japanese government is going to try to get companies to increase wages.

South Korea has been trying for a few years to redistribute wealth but using a different strategy. And it hasn't gone very well. Over the past few years SK has increased the minimum wage, a law, as a way to help low wage earners feel like they have what is called a living wage or feel good enough about the wages they might spend some in the economy.

But there have been challenges related to it. Many of the businesses who mainly use the minimum wage for their employees are either small businesses, franchise operators, service type businesses, and some small manufacturing businesses. 

What is common with all of these businesses is that they all operate on very slim profits margins and some or most can't afford the extra costs related to the minimum wage that has gone up every year the past few years.

The government has tried giving subsidies to companies to help them with the higher minimum wage but some companies say it isn't enough. What has happened is some companies are decreasing the hours of part-time or low wage workers as a way to maintain their profit margins. Some have even fired their part-time workers, such as the husband and wife operated convenience stores because they can't afford the extra costs.

Most if not all of the large companies in South Korea of course are not affected as they most likely already pay wages more than the minimum wage.

Article:

"I am hoping for pay hikes that eclipse 3 percent, which will be appropriate for the launch of the new capitalism," Kishida said. "I will stand in the forefront to help small- and medium-sized businesses so that they can properly shift raw material, energy and labor costs" onto consumers.

Masakazu Tokura, chairman of the Japan Business Federation, the country's largest business lobby known as Keidanren, responded he will call on member businesses to implement pay hikes.

Labor unions typically hold wage negotiations with management every spring.

Ideas:

The 3 percent goal might sound good, but with households feeing the pressure from high energy cost and the increase in prices already at supermarkets and restaurants, is it going to be enough? And just how much are companies actually willing to increase wages.

Unfortunately, in the 21st century, stockholders are always concerned with each quarter's results and profit margins are almost everything for some companies.

Consumers have got to feel good about their salaries. If they don't have enough extra or disposable income after monthly bills are paid and after they go to the supermarket for their weekly food needs, how can they afford to go out and about to other places.

And then the idea of passing on the costs to the consumers. It's only natural that companies want and need to keep a certain profit margin but Japanese consumers have become very price conscious or price elastic meaning see and feel any increase in prices.

As such many companies have been very reluctant to pass on their supply costs to customers, which results in decreased profits margins where the slim profits margins crowds other kinds of spending such as increasing salaries or increasing investments in needed areas.

Ideas:

Last week, Kishida's government approved its economic stimulus package, including a plan to raise the monthly salaries of care workers, nursery school staff and nurses by 1 to 3 percent from current levels.

The care workers' pay is regulated and widely seen as insufficient compared with other industries.

Upon becoming prime minister in October, Kishida pledged to reduce wealth disparity by boosting middle-class incomes.

Ideas:

It always good when workers can feel better about their salaries. Again whether the 1 to 3 percent is enough remains to be seen.

And yes, the government can't do everything for everyone in society but should try ensure that everyone at least has a living wage or wage that is high enough so that workers don't have to worry from month to month about how they are going to survive.

Boosting or increase middle-class income is important in every country and every society as over the past 20 to 30 years the income gap between the rich and the middle class has gotten wider and wider.

More on this later in the next article about the same topic, but it is questionable if Kishida and his government can pull it off. It is not going to happen tomorrow or next week. It might take a long time for consumers/workers feel a difference.

Have a nice day and be safe!

Japan Govt. Economic View: Updated Dec. 15

 https://mainichi.jp/english/articles/20211125/p2g/00m/0bu/063000c

Article:

TOKYO (Kyodo) -- Japan's government on Thursday retained its view that the economic recovery from the coronavirus fallout is showing "weakness," while expressing wariness over the impact ahead of recent higher raw material costs including crude oil prices.

"The Japanese economy continues to show weakness in picking up, although the severe situation due to the novel coronavirus is gradually easing," the Cabinet Office said in its overall assessment for November, retaining its view for the second straight month.

By component, the office upgraded its view for private consumption for the first time in 13 months, saying it shows "movements of picking up, while some weakness remains," after describing it as showing "further weakness" in the previous month.

Ideas:

The recovery of the Japanese economy is not going to completely come back to normal for sometime. With energy prices increasing, raw material costs increasing, with the continued chip shortage, the economy has a long way to go.

The severe virus situation might be easing somewhat in Japan, the same can't be said for other parts of the world, including Japan's neighbor South Korea, which now has more cases than the spring of 2020.

Consumer spending or private might be picking up, and most likely through the December holiday period including the week long New Year holiday, it most likely won't reach the pre-pandemic level and there are many constraints on consumer spending.

Home energy costs might be increasing, gas prices for cars keep increasing, food and supermarket prices keep rising and there are many consumers in some industries that still aren't where they should be.

But it will be interesting to see how much KFC increases its prices as buying KFC chicken is an annual Christmas tradition in Japan. If they do increase their prices, are they smart enough to not increase them too much for fear of maybe losing customers. Or is the buying of KFC chicken an inelastic food product that consumers are going to buy anyway despite an price increase.

Article:

The improvement reflected a pickup in consumer sentiment after the government on Oct. 1 lifted in all parts of Japan COVID-19 states of emergency that had asked people to refrain from nonessential outings, and eased on Nov. 1 its 10,000-specator attendance limit for large-scale events.

Despite an upgrade in consumer spending, the overall assessment was retained as the positive factor was offset by a downgrade in views for exports and industrial production due to disruptions in supply chains that have forced Japanese automakers to reduce output.

Exports in November have been "almost flat," revised downward for the second consecutive month, due to a slowdown in the Chinese economic recovery and falls in exports of auto-related products, it said. In the previous month, the government said they were "increasing at a slower pace."

Ideas:

A pickup in consumer sentiment is always a good thing but does it really mean more consumers are going to be out and about spending and the real question is how much are they going to spend with many products and services increasing their prices, not to mention the extra costs that consumers have to pay for gas, energy and supermarket price increases.

Exports are always a major area of focus for the Japanese economy, but at the same time it must be considered, while important, exports are not the entire Japanese economy. Some estimates indicate that exports might only make up 20 percent of Japan's GDP.

While in South Korea, for example, it is estimated that exports make up 50 percent of its GDP. Both South Korea and Japan seem to compete with similar export products, except for smartphones which Samsung is always near being the global leader in sales of smartphones, or was before the Chinese brands came onto the global stage.

At the same time Toyota has again come out with the possibility of some car plants being shut down on a temporary basis because of the continued chip shortage. It wasn't too long ago that Toyota signalled that it should be back to normal by the end of December. Most likely communication to its investors that all is OK, but as we see all is not OK, at least not yet.

Article:

The view on industrial production was downgraded for the first time in two months, with the report saying the pickup "appears to be pausing," partly due to sluggish exports of production machinery for Asian countries.

A Cabinet Office official said that although new car sales continue to decline amid a prolonged global semiconductor drought, expenditure on dining out and leisure activities such as going to movies and concerts is currently showing a modest recovery.

Looking ahead, the office said the economy is expected to pick up as "economic and social activities move toward normalization," but full attention should be given to a further increase in downside risks due to "supply-side constraints and raw material prices."

Ideas:

As seen, an economy is very complex with many living or functioning parts. While exports and the manufacturing industries are a big part of the Japanese economy, and maybe they drive the economy more that some other parts, they should not be considered as the only parts of the Japanese economy. 

One must forget there is a large services industry or services economy within the Japanese economy. There are many parts to the services economy within the Japanese economy. While some or a lot it is not doing to good right now, in the 21st century it might be bigger that exports or the manufacturing sectors. 

Dining out and leisure activities might be picking up but most likely they might not get back to the pre-pandemic level for sometime. Yes in December during the holiday season and during the week long New Year period there is most likely going to be surge in consumer spending but not at the pre-pandemic level just yet.

And yes right now there are many constraints or negatives that is going to keep the Japanese economy from getting back to the pre-pandemic level anytime soon.

Article:

The official said the effect of rising raw material costs, which are feared to squeeze Japanese companies' profits, "may become more noticeable in earnings reports for the October-December period for listed companies."

He added the impact of such cost increases to consumers must be carefully watched as well, as electricity bills are expected to rise further and many companies including daily goods makers have announced price hikes, which could dampen their purchasing power.

Ideas:

Rising materials costs, unfortunately, is a constraint that might keep companies from increasing worker salaries by at least 3 percent that Kishida wants to see happen in April of 2022. Even with the tax break incentives offered to companies if they increase salaries to a certain level, it might not be enough for many companies to participate in the tax scheme. 

Companies have been "passing on their costs" for a while and beginning in January it looks like many companies have targeted January as the month to pass on even more of their costs to customers/consumers.

If they signal that they are going to increase prices in January then consumer/customers might take advantage during the December holiday period to buy now at the lower prices before prices increase.

If prices on everyday items as supermarkets and other places the Japanese government or the Japan Central Bank might consider the idea of giving subsidies to food company suppliers as a way not to increase prices anymore that the increase in prices will continue to erode the purchasing power of those on fixed incomes and low income families. 

The Japanese government has already signaled they are going to give subsidies to gas/oil/energy suppliers as a way to help consumers by not increasing prices. It might be a good strategy to give subsidies to food supply companies without resorting to price controls which could distort the market.

Have a nice day and be safe!

Japan Food Prices: Updated Dec. 14

 https://mainichi.jp/english/articles/20211123/p2a/00m/0bu/023000c

Article:

TOKYO -- Prices for bread, cooking oil and other products people use in their daily lives are going up one after another in Japan, placing a heavy burden on household spending. How far can prices on goods rise, and what effect will this have on living standards?

"I feel like everything except vegetables is getting more expensive. It's difficult for people living on their pensions," said a woman in her 70s out shopping at the main branch of supermarket Akidai Sekimachi in Tokyo's Nerima Ward. She said she had felt strongly that many goods, including bread and cooking oil, had gone up in price recently.

Ideas:

There is the idea that companies are reluctant to increase prices for consumers and they feel they might lose some or many customers. But that must not be the case, with some companies, now in Japan, as maybe their supply costs are increasing at a rate that they can no longer delay in increase in prices that they charge consumers/customers. 

There is always the option that the Japanese government might resort to price controls as a way to lesson the stress of consumers who are on fixed incomes. And or they could do what they are going to do with oil suppliers and give subsidies to the suppliers not to raise prices any more for the good of households and firms.

But that is maybe interfering in the natural operation of a market economy in that they are using artificial controls that could disrupt the normal flow of a market economy. 

Some might say let the market be natural and let the prices be natural and the will eventually get back to some kind of equilibrium in related supply and demand.

But the problem is how many fixed income consumers have to suffer before the prices level out back to some kind of normal.

Article:

She lives with her husband. Although they were making efforts to save by using frozen foods that can be eaten little by little while staying good, she couldn't hide her concern: "It seems all sorts of things are going to get more expensive. If prices get much higher, I'll reach my limit on what I can do."

Supermarkets, too, are struggling with what retail prices to set for the increasingly expensive products they stock. Hiromichi Akiba, head of the Akidai chain, expressed frustration: "Gasoline has gotten expensive, and transport costs have risen. It's quite difficult. But if prices keep going up then we might lose customers."

Ideas:

Consumer spending is going to become even more constrained meaning the increase in prices is going to reduce spending even more than what it is now.

And the pensioners, who tend to spend less than the average consumer now will have to spend even less. And then add in the regular consumer, who is not a pensioner and it might get even worse.

Pensioners and regular consumers are not the only ones feeling the increase in prices. The other side of the supply chain is the supermarkets. They of course know that their customers don't like increases in prices but now they have gotten to the point they feel they have no choice but to raise prices as their profits margins keep decreasing every month, and they can no longer delay price increased.

Gasoline prices increases, transport price increases, increases in products and food that supermarkets get from their suppliers all affect the profit margins of supermarkets.

And they know that they might lose customers as customers seek out and search for alternatives or substitutes which might have lower prices. 

Article:

Price revision announcements from food manufacturers and restaurant chains are coming steadily. Nisshin Seifun Group's Nisshin Foods Inc. has revealed that from January 2022, 151 of its products -- including home flour goods and others -- will have higher price tags.

The economic recovery from the coronavirus crisis and resultant steeply rising demand for wheat in China and poor harvests in the U.S. due to poor weather conditions have led to the Japanese government raising the sale price for imported wheat, which it reviews every six months. In response to rising flour prices, Yamazaki Baking Co. will from January 2022 raise the prices on a total of 247 products including toast bread and sweet bread by an average of 7.3%.

Ideas:

The price revision announcements might be like the 2014 and the 2019 sales tax increase. If consumers know or are told that there are going to be increases in prices, consumers, like in 2014 and 2019 might try to buy as many things as they can before the price increases actually take place.

In the Q1 in 2014 before the sales tax increase on April 1, consumers went on a spending spree and bought a lot as they didn't want to pay the 8 percent increase from 5 percent. But in Q2 of 2014 consumer spending decreased a lot. But as normal by Q3 consumers had gotten used to fact that they had no choice but to accept the 8 percent sales tax.

And again in September of 2019, many businesses in September were holding sales tax sales as a way to get consumers to buy before the Oct. 1 sales tax went from 8 to 10 percent. 

As I was in Yokohama in September of 2019, and at Yokohama station and the thousands of stores there it seemed like every store at Yokohama station (eki) had some kind of sale. And the same at Landmark tower and all of its stores.

But what was interesting later, and yes consumer spending decreased over the next few months but got back to some kind of normal after consumers again accepted the fact that they had to get used to the higher sales tax, was some consumers, maybe many regretted the idea that they went on some spending sprees for some products and bought a lot in anticipation of the sales tax increase.

So it will be interesting to see if consumers, in this situation, a little different but similar, will go increase their spending in December if companies are announcing that they will be increasing prices in January.

Article:

But rising costs are going further than flour. Estimates by the independent administrative institution the Agriculture & Livestock Industries Corporation, show that wholesale prices for short plate, a U.S.-made, relatively cheap cut of beef often used in gyudon beef bowls and all-you-can-eat Korean BBQ, have risen precipitously since this spring. By September, prices were more than 80% higher in a year-on-year comparison for three consecutive months. There are reportedly numerous factors at play, including reduced operations at meat plants due to the pandemic, rising demand in China and elsewhere, and resultant container shortages causing freight costs to rise.

Ideas:

So there are a lot of reasons for the increases in prices. And the usual idea that companies in Japan have been reluctant to increase prices might soon be a relic of the past, as an increase in prices seems to be affecting almost every industry in Japan.

If there is a positive in any of this, this might be the incentive that Kishida needs to promote even more his idea that companies increase salaries of their employees as a way to reduce some of the stress of higher food prices.

But of course maybe not all companies can afford to increase the salaries of their employees, if those companies themselves are seeing their profit margins decreasing because of energy costs, shipping costs, supplier price increases and so on.

Most likely the Japanese government is going to have to use some of its proposed new budget to try and help companies and consumers with the increase in prices if they continue to go up.

Again just the idea of giving subsidies to suppliers in the food industries as a way to help them not raise prices on supermarkets and restaurants for the good of society. If the Japanese government can do it for oil and gas suppliers they can surely do it for supermarket and restaurant suppliers.

Article:

Due to surging beef import prices, gyudon beef bowl chain Yoshinoya Co. made the decision on Oct. 29 to up its prices. Its regular size bowls are getting more expensive for the first time in seven years, and a customer ordering one to eat in with 10% consumption tax added will go from being billed 387 yen (approx. $3.4) to 426 yen ($3.7).

Soaring soy bean prices are also contributing to the problem. The effects of the African Swine Fever virus have depressed pork production, and to stimulate greater pig cultivation Chinese producers are importing more and more soy beans to be used as animal feed. Additionally, with the world strengthening moves away from fossil fuels, demand for soy beans in biofuels has also risen. Kikkoman Corp. will raise prices on soy sauce and soy milk delivered from Feb. 16, 2022. It is the first rise since 2008.

Ideas:

The pandemic has caused or created all kinds of problems besides just the virus itself and it looks like all of the problems besides the virus situation are not going away anytime soon.

And as the article shows, no country is isolated as now almost every country is connected through supply chains and other areas and no country is safe from what one country has as its problems now all countries can have similar challenges. 

As now no one can say inflation has not come to Japan. But of course it might be much worse in the EU and the US but the Japanese government needs to figure out what to do with the increase in food prices, the most basic need for every person in the Japanese society.,

While the rich, in every country might not even notice but the average consumer sees what is happening and feels it in that they have less to spend as the value of their yen is less now than a year ago, and it might continue to get even worse.

So maybe again its time for the Japanese government to intervene in the market economy and try fix what areas in can related to food prices for the good of society, without causing harm to food suppliers and try find a balance to help food suppliers and consumers.

Most likely this is not the kind of inflation that the Bank of Japan wants with its 2.0 percent increase in inflation that it has been trying to achieve for many years. Perhaps it would prefer to see a 2.0 percent increase in consumers spending as opposed to supplier inflation.

Have a nice day and be safe!

Japan Record Economic Stimulus: Updated Dec. 13

 https://mainichi.jp/english/articles/20211118/p2g/00m/0bu/046000c

Article:

TOKYO (Kyodo) -- Japan will spend a record 55.7 trillion yen ($488 billion) on an economic stimulus package aimed at easing the impact from the coronavirus pandemic, government sources said Thursday.

The package, including policy measures funded by the private sector such as emergency bank lending to struggling businesses, will be worth 78.9 trillion yen, the sources said. The Cabinet of Prime Minister Fumio Kishida will approve the package on Friday.

Expanded from an earlier plan of around 30 trillion yen, the fiscal spending, also including government "zaito" investment and loan programs as well as local government expenditures, will be larger than the 48.4 trillion yen outlay for a similar package compiled in April last year by Prime Minister Shinzo Abe's administration.

Ideas:

As the pandemic continues its good that the Japanese government is tying to help those in need, such as struggling families and businesses. The real challenge is how to get the needed funds to those who need it the most without them having to go through a lot of paperwork or red-tape.

The Japanese government should make is as easy as possible to get the money to those who need it the most without having to wait a long time and or having to complete a lot of paperwork.

And of course at the same time, try to prevent those who might try to take advantage of the situation and try to get the funds even though they don't need it.

There might be those who say the Japanese government has done enough and has already spent too much and is too much in debt already. But over the past twenty years, maybe some but not many have complained too much about how much the Japanese government is spending especially if it helps them.

Article:

Kishida, who took office last month and led the Liberal Democratic Party to victory in the Oct. 31 general election with a pledge to craft a stimulus package worth "tens of trillions yen," is set to increase support for households and companies in an attempt to meet his goal of redistributing wealth.

Among the key measures in the package are 100,000 yen handouts in cash and vouchers for children aged 18 or younger in households with an income of less than 9.6 million yen, which is expected to cost about 2 trillion yen.

Another 2 trillion yen will be allocated for financial aid for struggling families and students, while small companies reeling from the pandemic are expected to receive financial support of up to 2.5 million yen each.

Ideas:

The idea of redistributing wealth might be a very good idea, but the challenge is how to do it. There might be many positives and negatives in the execution of how to do it. At one time it might have been a good idea to see how the Northern European countries were able to maintain a level of inequality that was among the lowest in the world. But those days are long gone as even in the Northern European countries the inequality levels and the Gini Coefficient has been increasing.

And then again there might be some how might say the government shouldn't do everything. But these are not normal times and the market economy, due the pandemic, is not operating in a normal way, where there are always going to be those who do better and those who don't do as well.

The idea that every business or every family can just lift themselves out of the pandemic crisis is not looking at reality. Sometimes, like now, governments need to step in, and maybe more than once, for the good of society and for the good of everyone.

A society and an economy that is fully functioning where most businesses and most families are able to participate in the economy is a healthy economy. But right now it might not be too much to say the Japanese economy is not a healthy economy. There are many parts of the economy that is not functioning normally and its going to take some time to get back to some kind of normal or a new normal.

Article:

To boost consumption while promoting use of the unpopular "My Number" identification card system, the government will give shopping points worth up to 20,000 yen to individuals who already have or newly acquire the cards.

To fund the package, the government aims to pass a supplementary budget in an extraordinary parliamentary session to be convened by year-end.

The size of the extra budget for the fiscal year through March is expected to be 31.9 trillion yen, according to the sources.

Ideas:

The challenge of the "My Number" identification could be the paperwork or the steps needed for it, which unfortunately has been a major challenge for Japanese citizens. It should be as easy as possible to get and to use. 

And then if they use it at businesses, how much paperwork do businesses and consumers have to go through. The Japanese government needs to streamline or make these programs as easy as possible. Get rid of as much paperwork as possible and make it as easy as possible for consumers and businesses.

Consumer spending will never get to a level that it can help the economy grow until consumers start to see significant increases in their salaries. Until then consumer spending will never be at the level it should for the 3rd largest economy in the world.

How about the idea of just putting money into the bank accounts of every Japanese citizen if the Japanese government hasn't done it already. And not just once but a few times so that consumers can see and feel they have some extra income to save part of it or spend part of it.

Article:

The government will issue new bonds to partly finance the budget, a move that would worsen Japan's fiscal health, already the worst among major developed countries.

As for other measures, the monthly salaries of care workers, nursery school staff and nurses, whose pay is regulated and widely seen as insufficient compared with other industries, will be raised.

Following a recent sharp drop in the number of coronavirus infections in Japan, the government will also restart the "Go To Travel" subsidy program in an effort to prop up the pandemic-hit tourism sector. The program has been suspended nationwide since December amid the spread of the virus.

Ideas:

Japan's fiscal health has been a source of concern for the past twenty years. But at the same time the Japanese economy continues to move on. Yes a a very very slow pace but it keeps moving on. 

And yes, as the Japanese society gets older and older the fiscal health of the Japanese government will become more of a concern. But at this time, there are too many other factors that need to be resolved that requires the Japanese government to become even more Keynesian, meaning sometimes the government needs to step in even more and help society.

If salaries are increased, especially with those how need it there is more of a possibility they will participate more in the economy, meaning they will spend more in the economy, as now they feel better about their salaries and they can go out and do things now when before they couldn't or wouldn't.

And now, as I write this I'm listening to the Japanese Diet, on NHK, debate, discuss, and present their ideas about the economy, and they are talking about these same ideas.

The "Go To Travel" program might still be a good idea, but how many people are ready to travel, with the new omicron virus in the news now everyday. And another question might be how many businesses in the tourism sector will it benefit.

The tourism industry, both domestic and international might not get back to some kind of normal for a long time. But maybe the "Go To Travel" program is at least a start to get people traveling again and begin to help some in the industry.

Article:

To help households and firms suffering from surging prices for gasoline and other oil products, a new subsidy program for oil distributors will be set up to contain prices once they hit a certain threshold.

With the aim of beefing up the nation's economic security, around 500 billion yen will be earmarked to encourage the development of key technologies including artificial intelligence, amid intensifying global competition for advanced technologies and concerns about intellectual property protection.

The government also plans to help create semiconductor production bases amid a prolonged worldwide chip crunch.

Some policy measures under the package will be covered by the initial budget for fiscal 2022, to be drafted next month.

Ideas:

So what the Japanese government is doing is something like price controls. But instead of putting the price control on the gas pumps they are giving a subsidy to oil distributors which might be even better.

As the oil distributors get the oil from OPEC and other places and have to pay even higher prices, most likely every month, and then have to pass on the higher prices next in line including at the gas pumps. the prices for households and firms get higher and higher.

With a regular price control, where there is a ceiling or limit on the priced at the gas pump, the regular consumer now doesn't have to pay the higher prices that the supplier might want to pass on. The problem now is the supplier's profit margins are getting smaller and smaller every month because of the price controls they now can't pass on their increased cost to the next in the chain.

But with subsidy, everyone wins. The consumers might not see continuous higher prices as suppliers don't feel the pressure to continue to pass on their costs to the next in line as the subsidy might be covering some or all of their increase costs.

But then there are always those who might say "let the market fix itself" meaning let the market be natural, let prices be natural, and prices eventually will decrease on their own. The only problem with that thinking, while logical for many parts of a market economy, is that maybe too many households and too many businesses are suffering from the higher gas and oil prices.

Every country is now in race to develop or acquire the latest technologies the keep the country competitive. But the challenge is a new technologies are developed and put into use the become obsolete almost immediately as new technologies are developed which replace already existing technologies. 

It would be a good idea if the Japanese government and businesses work together and develop semiconductor bases as a way to ensure that there is never another chip shortage. The Japanese government, if they aren't doing it yet, should provide subsidies and programs, as needed, to whomever to create as many chip companies as needed for the future.

Have a nice day and be safe!

Japan's Core Consumer Prices: Updated Dec. 11

 https://mainichi.jp/english/articles/20211119/p2g/00m/0bu/020000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices gained 0.1 percent in October from a year earlier, reflecting upward pressure from higher fuel costs that threaten to cool consumer sentiment as the economy emerges from the COVID-19 doldrums, government data showed Friday.

The core consumer price index, excluding volatile fresh food items, has been in a tug of war between rising commodities prices and sharply lower mobile phone charges, according to the Ministry of Internal Affairs and Communications data.

Higher fuel costs heading into winter when energy demand increases are feared to deal a blow to Japanese consumers as the country sees a pickup in economic activity with the whole nation free of COVID-19 states of emergency.

Ideas:

Prices will most likely continue to fluctuate as an economy is very complex and there are always positives and negatives in an economy meaning prices are always fluctuating related to changes in producer prices, changes in energy prices, and changes in overall supply and demand.

Consumer spending in December and the New Year holiday might see a increase but after that consumer spending might slow down a little.

Part of the reason might be consumers might have spent a lot during the December holiday period and the one week new year period but after that maybe feel they need to spend a little less.

And then of course there is the higher fuel costs; including higher gas prices, higher home electricity and oil prices, as consumers might feel they need to cutback on spending as the higher energy prices are now crowding out other spending in the economy, as their is now less disposable income available.

Article:

Japan's high dependence on energy imports makes the resource-scarce nation susceptible to swings in commodities prices and a weaker yen also inflates import costs.

Gasoline prices rose at the sharpest pace in over 13 years, up 21.4 percent, tracking higher crude oil prices. Kerosene jumped 25.9 percent while city gas prices turned positive for the first time since August 2019.

A record 53.6 percent fall in mobile communications fees continued to weigh on the core CPI, masking, economists say, the full impact of rising inflationary pressure in Japan.

Ideas:

There are always going to be some positives and negatives in a market economy. And as an economy is very complex, the positives and negatives don't affect every company or every consumer the same.

For example even though a weaker yen is a positive for Japan's exporters its a negative for Japan's importers as now importers have to pay more for what they bring into Japan.

But some article claim it might be more of a positive and currently exporting is a very needed part of the Japanese economy, since there are many other parts of the economy that are not doing so good.

Even though Japan, and many other countries are beginning to use their energy reserves to try and bring gas and oil prices down, it can only be a temporary solution as countries may only had a 100 or 200 day at most reserve supply.

So they have to continue to import gas and oil at the higher prices that OPEC expects which means the oil reserve strategy, at best, can only help the economy so much.

Perhaps the Japanese government should consider the idea of gas and energy price controls, meaning limiting the price and not let it get any higher until oil and gas supplies can level off. 

But then that is interfering in the market, even more than the energy reserve strategy. Some would say let the market be natural and prices will eventually level off and get back to normal.

While always a good strategy the problem is how many families or businesses have to suffer with the higher prices until the supply and demand get back to some kind of normal?

As mobile communication fees continue to decrease companies such as Docomo and others are not going to let their profit margins decrease. They most likely will increase the prices of other products and services as needed to maintain their profit margins.

Article:

Major Japanese carriers decided to offer cheaper plans in the face of government pressure to ease the burden on consumers.

Accommodation fees gained 59.1 percent from a year earlier, when the government's subsidy program to shore up regional tourism in Japan sent prices sharply lower.

The rise in the headline CPI is still modest compared with the United States and some European nations where inflation is rapidly accelerating.

Excluding both fresh food and energy items, the so-called core-core CPI dropped 0.7 percent, down for the seventh straight month.

Ideas:

The increase in accommodation prices such as for hotels and other places most likely are not going to deter tourists or travelers in the near future and the December holiday period and the week long New Year period people will want to get out and about and travel as much as they can.

In the winter months of January and February, after the week long holiday period might see some lull or pause in travelers but as spring begins to approach and if the government starts the Go To Travel program again, there might be a surge in travelers again.

The increase in price at hotels and other places might be nothing more than hotels trying to make up for lost revenue and sales during the pandemic and the increase in demand as consumers want to get back to some kind of traveling.

Inflation has always been less in Japan than other countries as Japan producers and other companies are very reluctant to pass on their supply costs to the next in the supply chain and then to the final customer/consumer as consumers in Japan are very elastic meaning they are very sensitive to price increases. 

And of course consume spending has never been where it should be in Japan. Part of the problem is the problem that some companies might have very little room to increase salaries and their profit margins are always being challenged by increases in supply costs which are crowding out other areas such as increases in investments and or increases in salaries.

Have a nice day and be safe!