Japan Sept. Household Spending: Updated Nov. 27, 2021

 https://mainichi.jp/english/articles/20211105/p2g/00m/0bu/037000c

Article:

TOKYO (Kyodo) -- Japan's household spending fell a real 1.9 percent in September from a year earlier, down for the second straight month, as consumption was affected by sluggish car sales and a prolonged state of emergency over the coronavirus pandemic, government data showed Friday.

Average spending by households with two or more people in real terms stood at 265,306 yen ($2,330), according to the Ministry of Internal Affairs and Communications. It declined 3.0 percent in August.

By component, transportation and telecommunication outlays shrank 6.5 percent, contributing most to the overall decrease. Spending on cars has been slow recently as a global semiconductor crunch, as well as parts supply disruption resulting from virus infection surges in Southeast Asia, forced automakers to cut output.

Ideas:

Car sales just like big ticket appliances can have a significant effect on spending in an economy and maybe even more in Japan, as consumer spending or household spending, most likely never reaches it potential, as consumers are sometimes very risk adverse and or are very elastic meaning they might be weary of prices changes.

Transportation outlays or spending could be anything from not spending on travel on planes, shinkansens or regular train/subway travel most likely because of the continued pandemic.

Related the telecommunication spending it might be nothing more than the mobile carriers reducing the monthly fees on new plans as the Suga government suggested or more than a suggestion to lower the monthly fees on smartphones to reduce the burden on consumers.

Of course at the same time carriers are going to find ways maintain their profits margins by increase the prices are other products or services.

The car situation most likely will continue in the future, but according to some reports Toyota is beginning to see its production levels get back to some kind of normal.

Article:

A 3.5 percent fall in expenditures on food including dining out under the nation's months-long virus emergency through the end of September also weighed on the overall consumption.

In an effort to curb a coronavirus resurgence driven by the highly contagious Delta variant, the measure targeted 21 out of Japan's 47 prefectures including Tokyo at the beginning of September. Under the emergency, people were requested to stay at home and restaurants and bars were asked to close early and to not serve alcohol.

On a seasonally adjusted basis, however, September spending rose 5.0 percent from August in real terms for the first increase in five months, as the country saw a remarkable drop in the number of new virus infections since its peak in late August, although the emergency declaration remained.

Ideas:

A 3.5 percent decrease in spending on food may not sound like much but it you look at restaurant to restaurant or supermarket to supermarket there could be some places that might have seen a significant decrease in sales and revenue during that period. 

For example some places might not have seen any significant decreases while some places might have seen some significant changes in sales and revenues.

As a market economy is very complex there are always significant increases and decreases for many different reasons or variables.

Spending might have risen 5.0 percent in September but again it must be remembered a 5.0 percent increase does not mean every restaurant and every supermarket might not have seen a 5 percent increase.

Some might have seen more than 5 percent and some might have only seen a 1 percent increases as is common in a market economy.

But at the same time if we remember the idea of regression to the means, and take out the extremes above and below the 5 percent we might find many restaurants and many supermarkets probably had an increase in sales and revenue in September.

There is always the idea as to why there are now fewer cases in Japan compared to other countries around the world? Is it because Japan has reclassified the number of cases and only listing the most severe? Is it because of less testing? Is it because of the number vaccinated? Is it the number of people continuing to wear masks? But who knows exactly?

Article:

Amid steady progress in the government's vaccine rollout, the decrease in virus cases led the latest state of emergency to be fully lifted on Oct. 1 and restrictions on economic activities to be gradually eased.

"The situation over the virus is getting better, but household spending is unlikely to recover rapidly since the government has been relaxing (anti-virus measures) in stages," a ministry official told reporters.

As for other categories, outlays for entertainment services decreased 8.6 percent from a year before, with those for domestic and overseas package tours still weak. In the same month a year earlier, the state-subsidized "Go To Travel" campaign boosted such spending to some extent.

Ideas:

Consumer spending or household spending probably won't recover as much as the government would like it to. But consumer spending as always been one of the major weak points in the Japanese economy.

It is probably the main reason why the BOJ hasn't been able to reach its goal of 2.0 percent inflation, and most likely is not going to reach it anytime soon.

But as an observer of the Japanese economy, and having traveled to Japan many years before the pandemic, whenever I would go to Yokohama and Yokohama station, eki, and or Landmark Tower to observe what was going on, it seemed people/consumers were out and about and appeared to be spending a lot.

But it should be remembered that Yokohama like most of the large metropolitan areas which Yokohama is part of the Tokyo metropolitan area is not the same as the less populated rural areas which have seen a significant drop in population for years which of course means less consumer spending in those areas.

What or how might we classify as entertainment? Is it the Izakaya type places, is it regular restaurant type places, is it movie theaters and places like that, is it sports related events etc.?

We can easily say the pandemic might have reduced spending in all of those areas. And at the same time with the increase in Netflix and other online services going to movie theaters might not be as popular as before even before the pandemic.

Domestic travel with the "Go to Travel" program might begin to come back but as the virus situation appears to be heading to its 6th wave it might not come back as fast as expected.

Even though Guam, Saipan, Australia and other places are now opening to Japanese travelers, there might still be some hesitancy due to news around the world about the increase in the virus again.

Article:

The program to boost the virus-hit domestic tourism sector has been suspended nationwide since December, when the nation was seeing an expansion in COVID-19 cases. Prime Minister Fumio Kishida has said the government will consider resuming it following a recent sharp drop in infections.

Meanwhile, housing expenditures rose 5.3 percent, with the official saying that outlays on rent have been rising especially in the Tokyo metropolitan area as an increasing number of people are moving in search of space and comfort with the pandemic having forced them to spend more time at home.

The average monthly income of salaried households with at least two people rose a real 2.5 percent to 481,800 yen in September, up for the second consecutive month.

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

Ideas:

Kishida might want to travel program to continue but because of the global news this week might be thinking about waiting and take a wait and see approach.

Despite the terrible effects of the pandemic, in a market economy, there are always some positives and some negatives. In this case consumers/families are searching for new homes and places to rent, which might be considered a positive and consumer demand in the housing market has increased. Anytime demand increases it tend to increases prices. But at the same time, if prices get too high it can turn into a negative as consumers are risk adverse and or elastic related to prices that increase too much.

Kishida said this week that he wants companies to increase wages by at least 3 percent in April of 2022.

Household spending or consumer spending is never going to reach its potential until consumers can see and feel better about their wages. If not then consumer spending most likely will never reach its real potential in the Japanese economy.

This goal or idea might be a leftover from the Abe and the BOJ strategy of trying to get companies, before the pandemic, which were sitting on huge sums of cash in the banks to use some of that and increase the salaries of its employees, to hopefully increase consumer spending in the economy.

And the BOJ included in its strategy of lowering the interest rates to zero, on corporate bank accounts, as a way to "use your money or lose your money" over the long term. Meaning use your company money and increase the salaries of your employees.

At the same time there might be even more structural challenges that are causing consumer spending to be less that it should be such as the idea that maybe 30 percent or more of the Japanese workforce might be part-timers and contract employees, whose wages are not high and much lower than regular full-time workers. As such they don't feel good about their take home pay and after paying their bills, they have little or no disposable or extra income to spend in the economy.

Have a nice day and be safe!