Japan Household Spending: Updated Dec. 18

 https://mainichi.jp/english/articles/20211207/p2g/00m/0bu/023000c

Article:

TOKYO (Kyodo) -- Japan's household spending fell a real 0.6 percent in October from a year earlier, led by a plunge in purchases of furniture and other household goods after the government's cash handout boosted outlays on such items last year, government data showed Tuesday.

Average spending by households with two or more people was 281,996 yen ($2,500), decreasing for the third straight month, the Ministry of Internal Affairs and Communications said.

The pace of year-on-year decline slowed from the previous month, however, as expenditure related to eating out and traveling started to recover following the complete lifting of the coronavirus state of emergency on Oct. 1, a government official said.

Ideas:

There are always going to be some positives and negatives in an economy. And the Japanese government and the Bank of Japan know that can't expect to always see all positives in the economy. 

There are always going to be periods of more household spending and periods of less household spending. 

And that might have nothing to do with any economic conditions but more do to with household needs or wants at the time.

Most likely the purchase of furniture by households is not always going to be a weekly or even monthly purchase and maybe the same for appliances and they just bought once or twice a year. 

Of course the government cash handout might have been a good time to buy a new piece of furniture or a needed new appliance. 

But at the same time, this year households maybe don't need any new furniture and as such a decline in the sales of furniture which saw a spike last year due to the government handout. 

Article:

During the emergency declaration that lasted for months in several prefectures, including Tokyo and Osaka, people were requested to stay at home while restaurants and bars were asked to close earlier and not to serve alcohol.

Overall spending fell slightly from a year earlier after the plus and minus factors cancelled each other out, the official said.

"With uncertainties increasing after the detection of the new Omicron coronavirus variant, we will carefully watch expenditures" in the coming months, the official said.

Ideas:

Obviously households took advantage of the government handout last year with an increase in spending, the plus, but spent less this year as maybe they didn't have as much disposable  income, the negative.

And now you add in the increase in gas prices, the increase in home electricity and oil prices, and the increase in supermarket prices, its not surprising there was decrease in household spending and households had less disposable or extra income to spend in the economy.

And most likely if prices continue to increase there might be even less household spending in the months to come. 

But at the same time the December holiday period and the week long New Year holiday might see a spike in spending but increasing costs might keep spending down and not at the usual holiday splurge or spike usually associate with the holiday periods, not to mention the continued pandemic challenges.

And will the holiday spending period be enough for restaurants and other service type businesses to get back to some kind of normal despite the continue pandemic challenges.

Article:

By component, spending on furniture and household amenities such as tables, sofas and washing machines dropped 16.7 percent from a year earlier as purchases were lifted last year by the 100,000 yen per person cash handouts aimed at easing the economic fallout from the pandemic. It fell for the sixth consecutive month.

Expenditure on food, including on eating out, fell 0.9 percent for the third straight month of decrease, as people bought less seafood, meat and vegetables to cook at home.

Spending on eating out alone sagged 4.0 percent, but the decrease was smaller than a 20.1 percent drop in September, indicating that more people dined outside the home.

Ideas:

Again, most likely the 100,000 yen handout spurred an increase in items that households might have been putting off spending on and the handout was enough of an incentive to go ahead and get that needed furniture or appliance.

But as it was a temporary incentive, further spending on those kinds of products decreased as they are not the kinds of products households spend their extra income on every week or every month.

Regarding expenditures on food for home cooking could be related to two variables; the first variable is as the emergency measures were lifted more people decided to go out again and not cook at home.

The other variable might be the continual increase in supermarket food prices as consumers bought less than they usually do. And of course a combination of the two variables.

And the idea of eating out alone might be nothing more than consumers now have the chance to meet and eat with other people, and they don't see the need to eat alone.

In September was the beginning of the end of the delta variant and maybe people were anxious to finally get out and meet people for dinner or lunch.

Article:

Outlays for culture and recreation, including domestic package tours and accommodation, dipped 5.4 percent in reaction to an expansion in travel demand prompted last year by the government's "Go To Travel" subsidy program.

Among such items, accommodation spending was down 31.7 percent on year after a 57.8 percent dive in September, while expenditures on package tours fell 28.7 percent following a 56.8 percent plunge.

Meanwhile, transportation spending including airfares and rail fares climbed 15.3 percent, with railway operator data showing increased short-distance travel following the lifting of the state of emergency, the official said, suggesting more people are commuting.

Ideas:

An economy is very complex and its not possible to see positives related to every economic activity as consumers have limited resources and limited income so they have to make choices as how they want to use their income and resources.

The "Go To Travel" program might have had a positive affect last year with multiple areas but as it ended with the delta variant affecting travel and accommodation spending again, less people were out and about. 

But again there are positives and negatives, domestic travel related to airlines, trains, and subways have begun to see some increases in people moving about.

For example, looking at the Haneda airport arrivals recently there is a definite decrease in the number of cancellations, as almost all flights into Haneda, on the domestic side were arrivals and very few cancellations, expect for smaller cities or airports.

Article:

On a month-to-month basis, spending in October rose a seasonally adjusted 3.4 percent from September, rising for the second consecutive month, following a 5.0 percent increase in September.

The average monthly income of salaried households with at least two people advanced a real 0.4 percent in October from a year earlier to 549,269 yen.

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

Ideas:

Household spending or consumer spending hasn't been as high in Japan as other advanced countries. While in Japan it might be 50 percent of Japan's GDP, but in other countries its more than 60 percent of GDP.

There might be some factors related to that; such as salaries in Japan are lower than that in other advanced countries. As such maybe workers/consumers have less disposable income to use in the economy.

But at the same time, Japan might have a better labor situation in terms of stable employment or that companies are unable to just reduce their work force like in other countries.

But there is another negative that Kishida would like to see improve and that is increases in wages for company workers.

Consumers/workers have to feel good about their salaries and the extra income they have after they pay their monthly bills.

If workers can get a salary increase they might feel better about their salaries and their extra income and begin to spend more in the economy.

And then again there is the increase in gas, electricity, oil, restaurant, and supermarket prices that might constrain or limit how much consumers are willing to spend in the economy, even it they get the 3 percent increase in their salary that Kishida has been suggesting.

A household income of 549,269, is not that much when you add in all of the cost associated with families.

And it must be remembered that is the average and doesn't represent every family. There might be many above but at the same time there might be even more below that number, as the income gap in Japan has been increasing every year, which means the number above might skew the results and the number below the average could three or four times the number that is above the average.

Have a nice day and be safe!