Japan Industrial Output: Updated Jan. 12. All blogs in 2021 have been completed.

 Article Source:    https://mainichi.jp/english/articles/20211228/p2g/00m/0bu/018000c

Ideas:

While economists and other may like to see the stats and other related information. All that companies care about is that they are back in business and moving forward. The same can be said for the average consumer. They really aren't that interested in statistics, unless it affects them directly. 

The same can be said for indexes and other information. While important and useful the average business person and certainly the average consumer could care less unless something directly affects them.

So what is most important is to be able to communicate the statistics and information in a way for the average business person and consumer to show how it affects them now and in the future.

For example the first paragraph for the average consumer or business person is easy to understand and they can now might think prices on cars might decrease as production as started and the supply of cars might get back to normal and I don't have to wait 6 months for a new car.

While the second paragraph, for many, might be a little vague or ambiguous as most consumers don't know the first thing about indexes and probably could care less about them.

Even a business person might say how does this affect my business now and in the future.

Government agencies are always careful about how and what they say to try and provide the best and clearest possible picture of the situation.

The phrase "is pausing" most likely means slowing down or has slowed down at the moment. While "shows picking-up movement" might mean production has begun to improve again or has started again, after a slow down because of the chip shortage and other factors.

But it must be understood that an economy is very complex, and just because there is the idea of beginning to pickup beginning to improve doesn't mean all businesses, even in one sector, is seeing signs of improvement.

While the auto industry expanded 43.1 percent, which is very good of course, its doesn't mean all of the eight auto companies saw the same increase that maybe Toyota did. And even maybe some of the smaller auto companies might have seen an increase larger than Toyota or Nissan.

And as industrial production increased 1.8 percent in October again doesn't mean all production companies increased 1.8 percent. The 1.8 percent is just an average and some might have increased more and some might have increased less. It would be good to see the dispersion from the average to see how many companies maybe were above 1.8 percent and how many companies below 1.8 percent to get a more clear picture of the situation. 

Of course JETRO and other stats areas might have that information.

Due to the pandemic the idea that production from here on in is going to be smooth probably is not a good idea to forecast or estimate because the new virus, the omicron, has now hit Japan and if its in Japan most likely it will hit South-East Asia soon too.

So companies should be on the alert as to what might happen like in the summer of 2021 with supply shortages including chip shortages.

Whether true or not, in a BBC article during the summer a CEO from an German car company suggested that the chips shortage could last two years.

But if even if the CEO was a little pessimistic because of the continuing pandemic companies have got to be prepared for anything and the same things might come back, such as supply shortages, increases in logistics prices, and raw material and chip problems in the future.

For example plastic products might be surging now, but if the plastic factories are hit with pandemic problems then there might be a plastics shortage in the future.

Supply issues now and in the future should be on the minds of every manufacture as long as the pandemic is still alive as it can cause factory slow downs, factory shutdowns and materials shortages as has been common almost since the pandemic started.

And as with the delta virus the omicron virus has the potential to cause as much or more slow downs and shutdowns now and in the near future.

So companies have got to make sure their supply chains are viable and secure, and maybe need to have multiple suppliers if that is possible, so that in case a supplier of a part or something slows down or shuts-down the company can immediately get parts or other things as quickly as possible without any production slowdowns.

But of course more easily said than done.

The inventories index or inventories statistics is an important stat as it can indicate both production and demand. 

For example if the inventories of companies become too high it might indicate either a mismatch in forecasting and demand or it could indicate a slow down in demand and not enough being sold or shipped.

Of course if inventories are low it could indicate a lot of demand and maybe what was forecast related to demand was too low. 

Have a nice day and be safe!

Japan Unemployment Rate: Updated Jan. 13

Article Source:   https://mainichi.jp/english/articles/20211228/p2g/00m/0bu/014000c

Ideas:

An increase in the unemployment rate normally is not a good thing, but if people are looking to change jobs, and quit their present job it might indicate that there are a lot of jobs available and people are not afraid to quit their present job, with the anticipation of quickly finding another or new job.

That, in-itself, might be a good sign for the Japanese economy that people are not afraid to leave their present jobs and with the anticipation of finding a new job quickly.

It also might mean there are now a lot of jobs available or waiting to be filled. But unfortunately, as this writing is a little late the omicron virus has hit Japan, now like the delta variant and it might be a challenge for some looking for a new job.

There could be several reasons for people voluntarily leaving their jobs. It could be personal reasons, it could be they just don't like their job, it could be something else. But if 760,000 left their jobs that seems like a lot of people moving about. 

But lets take the Japanese cultural stereotype that some of them might be young women who are getting married, or some who have children and need or want to raise their children etc.

But that of course is not all of those who left voluntarily. But most likely jobs conditions in Japan have improved enough and that the job market is more competitive meaning offering better work/life balance or better benefits and even a better salary.

That would be good for the Japanese economy which often as being stereotyped as too rigid and or too many work hours and not enough salary increases.

But as more young people enter the workforce they don't want the same work style as their parents and as such companies need to respond and change if they want to get the workforce they need for their company.

So if 760,000 left their jobs looking for new work it might means companies are changing to meet the needs of the 21st century worker.

Pansonic, for example, just said they are going to introduce the 4 day work week to those who want it. That is an example of a Japanese traditional company who sees the writing on the wall know they need to change to meet the needs of the 21st century worker, instead of just business as usual for a traditional Japanese company.

Unfortunately the omicron virus situation has now reached over 10,000 cases in Japan and as such it might dent the optimistic view of some looking for a new job.

Once again, and still, the virus situation is most likely going to cause problems in the service industry. Whether tourism, retail, logistics, airlines, hotels and so on as people/customers/consumers begin to refrain from going to those places out of fear of the virus situation.

Hopefully its not going to dent the hiring of new workers or those workers who quit their jobs and are looking for a better or different job.

And then there is the possibility again of new emergency measures. But maybe Kishida recognizes that the Japanese economy can't go through any more slowdowns or shutdowns and will try to just keep as much of the economy open as over 80 percent of the Japanese population has been vaccinated and booster jobs in coming soon if not now.

The labor market, agreed, might have been on a recovery trend, but as the omicron virus situation has now exploded in Japan, hiring might have to take a puase for the time being until what is going to happen with the virus situation can be determined.

Hotels and restaurants might have to pause their hiring for a few months until the virus situation is clear about what is going to happen.There seems to be some ideas floating that the omicron might not be as dangerous but no one needs or wants to take a chance at this point, which means of course that hotel reservations are not going to increase and restaurants might not have as many customers as expected.

As was seen on Dec. 29, Wednesday, a picture of Tokyo station, eki, showed a lot of people moving and getting on the shinkansen for their New Year trips. And of course its unfortunate that maybe the number of people who move around Japan during that time might have helped the virus spread.

Most likely the "Go To Travel" program is not going to start as expected as the virus situation is getting worse each day and each week.Most likely it might not start again until the spring of early summer now.

Yes, agreed again, there might have been improvement in the labor market as the virus situation in Japan had looked to be leveling off with not that many cases.

But today it is much different. As there were over 10,000 cases, the most in over 4 months, which is definitely going to affect the services sector again. 

So now Kishida and others have to decide what are they going to do. Are they going to implement more emergency measures like last summer or they going to try and ride out the new virus situation like in the UK, which said no new emergency measures.

Or they can do like what South Korea started to do on Monday. They said for all department stores, big supermarkets, and restaurants, all those who enter must show an app on their smartphones that show they have been vaccinated and or a negative test. And paper documents are also accepted.

But it might be too cumbersome or even too much of a disruption to normal business activities in Tokyo, Yokohama, and Osaka to name a few large cities.

The next few days might be important as to what Kishida and others decide to do.

Have a nice day and be safe!

Bank of Japan: Update Jan. 11

 Source:  https://mainichi.jp/english/articles/20211227/p2g/00m/0bu/016000c

Article:

TOKYO (Kyodo) -- BOJ policymakers acknowledged rising inflationary pressure in Japan from higher energy and raw material prices, with their focus on price-setting behavior by companies, a summary of opinions at their December meeting showed Monday.

Such a rise, however, does not warrant a change in the current monetary easing steps with the BOJ's 2 percent inflation target still far off and a "premature" adjustment of policy would hurt economic recovery, one member said.

At the Dec. 16-17 policy-setting meeting, the Japanese central bank made no change to its monetary easing policy. But it decided to scale back COVID-19 funding support for large companies, gradually reducing the purchase of commercial paper and corporate bonds as their funding conditions have been improving.

Ideas:

Its good that the BOJ has decided not to change its approach as it knows it could hurt the current economic recovery as there are many families and businesses that are sitll not recovering or even close to it, especially if they are related to the service sector and even more especially if they are related to the tourism industry.

The 2.0 in inflation target is so far off, despite the increase in costs/prices of energy, raw materials, and even food prices, that the BOJ maybe should forget about the inflation target at this time and continue to focus on helping those businesses and familes that need help and worry about the inflation target at the time when the pandemic challenges have passed and the Japanese economny is back in full recovery.

Big companies most likely don't need to help that small and medium sized businesses do at this time, and the BOJ should focus all of their rerources on helping those.

Article:

"Since producer prices have continued to increase at a historically high pace, mainly on the back of a rise in raw material prices, the underlying upward pressure on consumer prices also seems to have been increasing gradually," one member said.

Another said, "It is necessary to examine whether the current assessment that risks to prices are skewed to the downside will remain appropriate, considering, for example, the recent rises in inflation expectations and raw material costs," in the next economic outlook report due out in January.

Wholesale prices have surged due to higher energy and raw material costs but the rise in core consumer prices, a key gauge of inflation, has been moderate, with a 0.5 percent gain from a year earlier in November.

Ideas:

Just perhaps if Japanese companies were to pass on their costs to the next in line, most likely to consumers, then maybe the inflation level or rate in Japan might be similar to what is happeing in the US or the EU.

But since Japanese companies seem reluctant to pass on their costs to the next inline, most likely consumers, the rate is going to remain low.

Perhaps because of the special relationship among companies and consumers and because of the sensitivity of Japanese consumers to changes in prices, companies don't want to disrupt the special relationship with their customers.

Which then places an some contraints on companies such as not increasing the wages or salaries of its employess or investing in projects or needed areas, because there profits margins are too low to do anything.

But at some point companies might need to change just like Japanese society some parts need to change to meet the demands of the 21st century.

Article:

The prospect of inflation not hitting its 2 percent target soon makes the BOJ one of the last major central banks to shift to policy normalization.

"Even when the bank completes the whole program, this will not mean in any sense a reduction in monetary accommodation," the BOJ said, referring to the COVID-19 funding support program, which also includes the provision of cheap funds to financial institutions extending loans to small and midsize firms.

The summary of opinions was compiled by Governor Haruhiko Kuroda and does not attribute comments to individual members.

Ideas:

But one area that should not change is the BOJ's approach to providing funds to banks to help small and medium sized firms as the pandemic is far from over and most likely many of them are in the services sector which is far from being in a recovery mode.

Perhaps there should be a complete paradigm shift in looking at how the Japanese economy really works and not rely on conventional economic theory or monetary theory and try to figure out, despite some major flaws the Japanese economy, it continues to just roll on and seems to be one of the most stable economies in the world.

For example inflation barely reaches 1.0 if even that while most central banks try to keep inflation in the 2.0 to 4.0 range.

Being below 2.0 might mean something is wrong or something is not correct, or there are major problems that need to be fixed.

Yes there is the salary and wage challenge, yes, there is the consumer spending challenge, and yes, there is the government debt to GDP ratio, yes there is the ageing challenges, but the Japanese economy just keep moving on despite some major challenges.

Have a nice day and be safe!

Japan Core CPI: Updated Jan. 11

 Source: https://mainichi.jp/english/articles/20211224/p2g/00m/0bu/020000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices gained 0.5 percent in November from a year earlier, the highest increase since February 2020, pushed up by surging energy costs and a weak yen, government data showed Friday.

The core consumer price index, excluding volatile fresh food items, marked the third straight month of growth, according to the Ministry of Internal Affairs and Communications.

In February last year, the figure, a key gauge of inflation, increased 0.6 percent.

Much of the gain in the November core CPI came from higher energy and raw material costs on the back of the weak yen, though the Bank of Japan is still far from achieving its 2 percent inflation target.

Ideas:

Its no surpirse that core consumer prices are increasing. But a 0.5 percent increase should not be a worry for the Japanese economy, as inflation is not even near the 2.0 percent that the Bank of Japan has targeted.

But at the same time, households might be concerned that home energy prices and gasoline prices for their cars keep increasing.

The weak yen can be both a positive and a negative as it helps exporters and they can get more for what the export and sell globally. but hurts importers as the have to pay more for whatever is brought into Japan.

The Bank of Japan's target of 2.0 percent inflation should not come from increased energy costs or increased supply cost or from too much passing on of costs, but from consistent consmer demand in the Japanese economy.

Article:

Energy prices gained 15.6 percent, the largest increase since August 2008, the ministry said.

Kerosene prices jumped 36.2 percent from a year ago and gasoline surged 27.1 percent, reflecting higher crude oil prices. Electricity bills, which track crude oil prices with a lag, rose 10.7 percent.

Sharply lower mobile phone fees, down 53.6 percent in the reporting month, introduced earlier this year amid government pressure to ease the burden on consumers, were a major drag, helping limit the rise in the headline inflation figure.

"It's easy for energy and food companies to pass on higher costs quickly to consumers," said Toru Suehiro, a senior economist at Daiwa Securities Co. "Beyond such items, price hikes have not spread, especially in the services sector hit by the pandemic."

Ideas:

Energy prices seem to be getting out of control. Perhaps its time for the Japanese government to put some kind of price controls into place and its time to begin to consider price controls if energy prices start to get too high for anyone in the economy and society.

A price control is supposed to keep prices from going any higher as a way to help the economy and society. 

At the same time some would say its interfering in the market economy instead of letting the marke be as it is.Some would say market interference is too distruptive to the normal and regular market forces.

And the same can be said for potential emergency measures if they are implemented again in the Tokyo area, as maybe being too distruptive to the Japanese economy. 

As much of the popluation is now vaccinated and boosters are beginning, maybe the Japanese economy doesn't need any more emergenecy measures.

But beyond food and energy companies it will be interesting as to what other companies try to pass on their costs to consumers.

Article:

Japan has seen prices rising only moderately compared with other nations such as the United States, which marked the sharpest gain in around four decades of 6.8 percent in November.

Despite upward pressure from commodity prices, Japan's inflation is expected to remain low, giving the BOJ reason to maintain its easy money policies and diverge from its U.S. and European peers, which are moving toward dialing back crisis-mode stimulus.

A ministry official said prices are "rising steadily" in Japan, where the BOJ projects the core CPI to rise 0.9 percent in fiscal 2022 starting in April.

Ideas:

Most central banks want to keep inflation in the 2.0 to 4.0 range. Most feel that is a manageable level and the economy is running at a good level of activity.

Below 2.0 percent they might think an economy is not running as good as it can,meaning consumer demand is below where it should be. And above 4.0 percent some might think an economy is beginning to get into the overheated range.

But as an economy is very complex there are many layers in the economy. And as been seen in the Japanese economy, perhaps reaching the BOJ's target of 2.0 percent is not feasible or even needed, for the most part, for the economy to be running at a good level.

That is Japan's economy has been stuck at an inflation rate well below the 2.0 level that the BOJ wants to see. While it might be good to try and get it up to that level, but some might say, why bother, not counting the pandemic, the Japanese economy has been moving along just fine the past 2 or 3 decades.

There are some major flaws of course in the Japanease economy, and for the most part, they are out of the control of the BOJ. The big one is of course wages and trying to get companies to increase wages. The BOJ and even the Japanese government can only do so much.

The other major flaw, compared to other countries is that maybe consumer demand or consumer spending is not where it should be or maybe is not at its potential.

The Bank of Japan is right in keeping its easy money policies now as the virus situation doesn't look like its going away any time soon and there are still many companies and families that are not doing so well.

Article:

"The worry is that such items as energy and food are closer to people's daily lives so higher prices can hurt sentiment among consumers. They may start feeling that it's bad inflation accelerated by yen weakness at a time when economic conditions are not good," Suehiro added.

Japan's COVID-19 state of emergency was lifted in October, allowing economic activity to pick up. Accommodation fees continued to surge in November, up 57.6 percent from a year ago when the government's subsidy program to rejuvenate regional tourism in the nation led to sharp discounts.

Excluding both fresh food and energy items, the so-called core-core CPI fell 0.6 percent, down for the eighth straight month.

Ideas:

Energy and food prices are two items that are very important ot the daily lives of people. As they have to heat their homes, they have to use electricity in their homes, they have to go to the supermarkets, and they have to drive their cars and use gasoline.

As such these are items that most likely they have to use on a daily basis. Yes of course they might try to conserve on energy and they might try to find subsitutes for some food products, but over time they have no choice in these basic daily items.

An economy, again, is a very complex organism. Yes there can be the illusion that the economy is moving and is recovering and that there is more economic activities taking place. 

But at the same time, such as the US, despite a record number of jobs in 2021, despite the pandemic, inflation was at a four decade high. 

So there can be some parts of an economy that appear to be doing very good and some parts of an economy that aren't doing so good.

So in Japan the economy might appear to be recovering but maybe because of the weak yen some food prices and most of the energy commodities are beginning to get too high for the average consumer.

And then as has been reported some some media, there is the potential challenge of nationalistic hording of some energy commmodities which in effect could result in a energy coommodity price war or an energy commodity shortage, even more than now.

As Japan is a resouce weak country and has to import much of what it needs its in a vulnerable position.

But it does have some political and economic power being the 3rd largest economy in the world and in a somewhat strong alliance with the US, and it could be important if the energy commodity situation gets worse in 2022.

Have a nice day and be safe!

Japan GDP Upgrade: Updated Jan. 7

 Article Source:   https://mainichi.jp/english/articles/20211223/p2g/00m/0bu/022000c

Article:

TOKYO (Kyodo) -- The Japanese government on Thursday upgraded its growth forecast for the domestic economy in fiscal 2022 to a real 3.2 percent from the previously estimated 2.2 percent, expecting the pace of recovery from the coronavirus pandemic-caused slump to pick up following a weaker-than-anticipated improvement in the current year.

The projected pace of growth in gross domestic product, the total value of goods and services produced in the nation, will be used as the basis for the government's tax revenue estimates as it draws up the draft budget for fiscal 2022 starting April, which Prime Minister Fumio Kishida's Cabinet is set to approve on Friday.

The initial budget is expected to total around 107.6 trillion yen ($950 billion), a record high for the 10th straight year, according to government sources.

Ideas:

It must be remembered that a forecast is nothing more than a guess, and no-one can actually predict what is going to happen in the future. Of course its good to review historical information and trends and attempt to use statistical programs, based on past experience, to predict what might happen in the future, but again, its just a guess and nothing more.

For example, already on Jan 7, the virus situation and the omicron variant is already causing challenges in some parts of Japan. And most likely its going to fully spread to the Osaka and Tokyo areas, which most likely is going to put a strain on the Japanese economy.

A weaker-than-anticipated improvement for 2022, using a the regular calendar and not the fiscal calendar, looks to be the norm for 2022 and if the omicron situation explodes like the delta situation did in August 2021, reaching 3.2 might not be achievable. 

Article:

Due to the prolonged economic fallout from the pandemic on the back of repeated resurgences of infections, the office cut the GDP growth rate projection for the current fiscal year from 3.7 percent to 2.6 percent.

The government had originally estimated Japan's GDP in 2021 would return to its prepandemic level in the October-December period of 2019, but the goal will likely be pushed back to March, a government official said.

The size of GDP in real terms in fiscal 2022 is expected to reach a record 556.8 trillion yen, topping the previous high of 554.3 trillion yen in fiscal 2018, according to the official.

Ideas:

Everything right now is up in the air, meaning with the new omicron situation, forecasts and projection are now just guesses as no-one knows what is going to happen the next couple of months as Japan and globally it might be a repeat of the summer of 2021.

Of course government and agencies want to show something postive but after almost two years of the virus situation, they will have to continue their estimates almost on a weekly or monthly basis as the situation changes.

But at the same time, after two years of the virus situation, perhaps businesses and society have learned to live with the virus situation and maybe just maybe there will be some kind of "new normal" or more specifically a "living with covid" without having to resort to severe emergency measures that potentially can shutdown parts of the economy.

The idea that the Japanese economy can return to the pre-pandemic level of economic activity is maybe too much to achieve at this time. Perhaps in April or even the summer, if things begin to settle down, the Japanese economy will be back to more of a pre-pre pandemic level than it is right now.

Article:

The GDP growth forecast for the next fiscal year is slightly higher than the average 3.0 percent increase estimated by private-sector economists in a survey earlier this month by the Japan Center for Economic Research.

In nominal terms, unadjusted for inflation, the world's third-largest economy will likely expand 3.6 percent to a record 564.6 trillion yen in fiscal 2022, upgraded from an earlier projection of 2.5 percent, the government said.

Private consumption, which accounts for more than half of the Japanese economy, is expected to increase 4.0 percent in the next fiscal year, unchanged from the previous estimate.

Ideas:

Most likely the estimates and forecasts were alll calculated before the omicron virus situation hit globally. As such new estimates an new forecasts are going to have to be re-calculated to include economic activity during the now omicron period as it looks like Japan is going to have a full-blown omicorn situaton like the delta situation in August.

The phrase unadjusted for inflation is an interesting economic concept that is most appropriate for the US and the EU, but as has been reported over and over in the Japanese media and government reports, including the BOJ, inflation is Japan is so low, it should have no affect on how the estimates are reported, nominal or real.

Private consumption or private spending has always been a concern for the Japanese economy. Not to disparage anyone with what they think but an estimate of 4.0 percent seems a little high, unless whomever is expecting that companies in April 2022 are going to increase wages above the 3 percent that Kishida wants to see. 

If wages don't increase significantly in April of 2022, or if any at all, consumer spending most likely is not going to reach a 4.0 percent growth. There are just too many external variables now which are affecting and will continue to affect households, families and even single consumers now with home energy prices incresing, gasoline prices increasing, supermarket prices increasing and even some restaurants increasing their menu offferings.

Article:

Capital expenditure is now estimated to rise a real 5.1 percent, higher than the July forecast of a 4.2 percent expansion.

Exports in fiscal 2022 are forecast to climb 5.5 percent, following expected growth of 11.4 percent in fiscal 2021, benefiting from the global economic recovery.

Ideas:

Capital expenditure or spending is another area that might not reach a real 5.1 percent given the new omicron situation. But at the same time, businesses might be tired of waiting decide we need to move we need to invest now while we can.

Exports are always a bright spot in the Japanese economy as Japan is an export powerhouse. Even a 5.5 percent increase will help the Japanese economy. 

Of course the weak Japan yen, which just got even weaker this week against the US dollar will bring in even more revenue into the Japan current account, which has to balance against the increase in prices that Japanese importers have to pay for because of the weak yen.

But Japan needs to be careful that the omicron situation doesn't turn into another summer of 2021 situation with supply shortages, chips shortages, logistics prices increasing and so on.

So the future is not clear at this point as many things seem to be up in the air because of the omicron situation.

Have a nice day and be safe!

マクドナルド: Updated on Dec. 23

Source:  https://mainichi.jp/english/articles/20211222/p2g/00m/0bu/034000c

Article:

TOKYO (Kyodo) -- McDonald's Co. (Japan) will only offer french fries in small sizes as potato imports from North America have been delayed due to flooding near a Vancouver port and a worldwide logistics disruption caused by the COVID-19 pandemic.

The sale of medium- and large-size fries will be stopped from Friday to Dec. 30 as the potato supply falls, McDonald's said in a statement on Tuesday. The hamburger chain continues to sell small-size offerings as it tries to make sure customers can enjoy the popular item despite the shortage.

McDonald's said it is expediting the procurement of potatoes and plans to put medium- and large-size fries back on the menu by 10:30 a.m. on Dec. 31.

The suspension will take place at about 2,900 stores nationwide. The supply issue will not affect its hash brown offerings, the company said.

Ideas:

All week long in Japan, in the newspapers and on TV, the talk has been about McDonalds and the shortage of potatoes for french fries.

In normal supply/demand economic theory, a supply shortage would shift the supply curve to the left resulting in a new equilibrium price, which is now higher.

So you would expect that McDonalds would increase the prices of it fries in order to maintain profits during a shortage.

Even though McDonalds plans to stop selling the medium and large-size fries the article doesn't say anything about if they are going to change the prices of the smaller-size fries.

As this is the holiday season most likely there will be an increase in demand too, so we would see in regular economic supply/demand theory a shift the both the demand curve and the supply curve but again resulting in changes in the price.

But it looks like maybe McDonalds is ignoring normal supply and demand theory and maybe McDonalds, for the good of its customers, might not be increasing the prices of its french fries and just temporarily reducing its offerings of medium and large-sized fries.

The idea that McDonalds is not limiting its offering of hash browns might mean it wants customers in the morning to continue to buy the morning breakfast set of a egg/ham muffin, hash browns, and a hot coffee etc.

And then there is KFC. As buying boxes or buckets of KFC chicken has become a tradition in Japan on Christmas eve or Christmas day, it remains to be seen what KFC is going to do during the global logistics challenges that might have increased the price of chickens that it uses, if they are bought globally and not bought in Japan. 

What is KFC going to do now, the holiday season, and it the future related to prices in the wake of increasing supply prices, increasing logistics price, and increasing energy prices?

Demand of course is going to increase significantly so what is KFC going to do? For the good of its customers and customer good will they maintain prices as is, banking on the idea that an increase in demand will make up for or cover the increase in supply and energy costs during the holiday period.

And or will they then after the New Year period raise prices, like many companies are going to do, in 2022?

And then there are all the shops and stores they sell a lot of holiday and New Year's cakes. What exactly are they going to do. Have they already increased their prices because of supply and energy costs increasing or are they going to wait until after the New Year period to increase their prices too, if they haven't already increased their prices, which some articles have already suggested.

Most likely because many of these items might be considered important for the holiday period, consumers are just going to ignore the increase in prices, at least for the holiday period and buy what they want and need and then when the holiday period, including the New Year week holiday period ends, begin to think twice about buying something if the price has risen too high and or find substitutes with the quality or value.

Have a nice day and be safe!

Japan Economy Upgrade: Updated on Jan. 6

 Source: https://mainichi.jp/english/articles/20211221/p2g/00m/0bu/041000c

Article:

TOKYO (Kyodo) -- Japan's government upgraded Tuesday its key assessment of the country's economy for the first time in 17 months, citing a rebound in private consumption fueled by low numbers of new COVID-19 cases.

The Japanese economy "shows movements of picking up recently as the severe situation due to the novel coronavirus is gradually easing," the Cabinet Office said in its report for December. In the previous month, it said the economy was showing "weakness."

The office's view for private consumption was upgraded for the second consecutive month and was the most upbeat among the categories, with the report saying it "is picking up recently."

Ideas:

The Japanese economy may be picking up as suggested but most likely its a long way from getting back to some kind of normal or new normal.

There are still too many parts that just aren't where they should be at this time. Of course the biggest concern might be the services sector and the travel and tourism parts of the services sector.

Domestic toursim, even if and when it back to some kind of normal or even a new normal, can't replace the thousands of international tourists that came to Japan before the pandemic.

So until Japan begins to open up again to international tourists, the services sector and specifically the tourism sector is going to contrain the services sector from getting back to a pre-pandemic level.

Consumer spending might be increasing but can it pick up significantly to help the economy grow. Consumer spending has always been a weak link in the Japanease economy, and even though its increasing some, it might not be enough, yet, to really help the economy get back to normal.

Article:

Spending increased not only in eateries but also in entertainment businesses such as movie theaters and amusement parks, while new car sales also bounced back after hitting bottom last summer, a Cabinet Office official said.

Despite the emergence of the Omicron coronavirus variant, the number of nationwide daily new COVID-19 cases has stayed mostly below 200 for about a month in Japan, compared to over 25,000 at its peak in the summer.

The government fully lifted the coronavirus state of emergency in October. Reflecting improvements in confidence among lodging and dining-out service providers, the Cabinet Office revised upward its view for business conditions for the first time in five months, also saying it shows signs of "picking up."

Ideas:

The number of cases at below 200, when this article was written, is not where the cases are now. As of Jan. 5 the cases has increased to 1,000 according to some news outlets.

Its good that consumer spending is pickup and increasing but it has a long way to go. Some consumers may feel constrained to spend a lot becuase of the increase in gasoline prices, the incease in home energy prices,and the inceases supermarket prices, and feel they don't have enough disposable income to spend a lot.

Part of that might be related to not having a salary increase for over 10 years as some have suggested. For the Japanese economy to grow and get out of the pandemic economy, companies need to step up and do their part by increasing the salaries of their employees.

Of course they might say they are too constrained to increase wages because of increase in supply costs, the increase of energy costs, and for some the increase in logistics costs globally.

And then there is the continued idea that some companies are reluctant to pass on their costs to the next in the chain and they know consumes are very sensitive or very elasitic to increases in prices. As such they continue to abosrb their costs, which results in being contrained to increase wages and or invest in any projects they think they need or are important.

Some lodging, hotels, and restuarants might be feeling better, but its a long way from where it should be. But something of course is better than nothing and it might be a good start to getting back to some kind of normal.

Article:

But business investment was downgraded for the first time in 13 months, saying it "appears to be pausing for picking up." The downgrade follows a fall in seasonally adjusted capital spending in the July-September period, affected by supply chain disruptions stemming from the pandemic, according to the office.

"We see the fall in July-September quarter as temporary," the official said. "We consider capital expenditure is still on a recovery track as corporate investment plans for fiscal 2021 have not largely changed."

Exports in the reporting month have been "almost flat," using the same wording for the second straight month as the pace of recovery in the Chinese economy slowed.

Ideas:

Business investment is never a complete upward trajectory as there will be periods of increase, periods of pausing, and periods of decrease and or less than the quarter before. As business investments might follow a business cycle movement, of pausing, increases, adjustments related to business conditions.

The supply chain disruptions might have caused some of the captial spending pauses or decreases but there are always a multitude of reason why businesses decide to spend or not spend again becuase of the many external factors that businesses are facing.

Some would say the pandemic or a down time is the best time for a business to spend or invest as some or many companies might wait for perfect or near perfect conditions to spend again. But a company that spends early and is prepared when conditions improve might have a competitive advantage over companies that take a wait and see approach.

Just becuse exports might be flat doesn't mean that there is not a good level of economic activity or export activity. It only means exports might not be increasing significantly from the last reporting period. 

As the Japanese yen is weak, still indicates that exporters are able to bring in a significant amount for their exports. That in itself is important as importers are constrianed or are having to pay even more for the products they bring into Japan. The key of course if the exports are more than imports which increases Japan's current account balance.

To be careful here, China, needs to get back to opening up its economy during the pandemic and to get back to normal as soon as possible, and try to fix some of its econmic structural challenges.

Article:

The view on industrial output was also retained. The report said it "appears to be pausing for picking up" partly because China slashed smartphone production amid the global chip shortage.

Looking ahead, it said the economy is expected to recover but added "attention should be given to the effects of the novel coronavirus" including its variants.

The official said the government will carefully watch the trend of private consumption, pointing out there are mixed factors such as a decrease in year-end parties but an increase in transportation reservations for returning to hometowns during the New Year holiday.

Ideas:

Most likely not just in China but smartphone production has paused because of the global chip shortage. Most likely smartphone factories globally have been affected and not just car production factories.

And economy is very complex and the Japanese economy is no exception. Some parts of the Japanese economy may be picking but some parts of the Japanese economy might still be lagging for a variety of reasons.

The fact that the omicron virus looks to have finally fully arrived in Japan is not a good sign for the Japanese economy and its attempt to fully recover. If the omicron situation explodes and becomes another delta virus situation like last August, the Japanese economy might be headed for another setback in the near future.

There might have been an decrease in year-end parties but that might not be that big of deal as consumer spending has many parts. And yes an increase in travel might bode well for the economy, but most likely it won't be enough to overcome the pandemic situations. 

Looking at pictures of new outlets and the travelers on Dec. 29th, Wednesday, it looked like the number of people traveling through Tokyo station, eki, was at or near the pre-pandemic level.

And when looking at the Haneda airport website and the domestic departures and arrivals, it appeared there were no or very few cancellations which have been very common since the pademic started.

Of course just becuase a JAL or ANA or Solaseed or any of the other discount airlines departed Haneda doesn't really indicate how full the planes were at 10, 20, 50 percent full. respecfully is not know. 

As we get more into January, more information about how many people actually traveled and if there was a significant increase in consumer spending during the New Year holiday period.

Have a nice day and be safe!