Japan's Consumer Confidence:

 Source Article: https://mainichi.jp/english/articles/20220131/p2g/00m/0bu/046000c

Article:

TOKYO (Kyodo) -- Japan's consumer confidence worsened in January for the second straight month amid a resurgence of coronavirus infections and higher consumer prices, the government said Monday, downgrading its assessment for the first time in eight months.

The seasonally adjusted index of sentiment among households made up of two or more people fell 2.4 points to 36.7, the Cabinet Office said. The index indicates consumers' economic expectations for the coming six months, with a reading below 50 suggesting the pessimists outnumber the optimists.

Ideas:

While indexes are meant to get the feel of what is happening or what has happened, it must be remembered its just a guage meaning they can't really see into people minds or hearts.

And yes, most likely consumer sentiment or feeling might have worsened it doesn't mean all feel the same way. And at the same time, just because consumers might not feel good about the economy with the virus situation or because of the increase in prices its doesn't mean they are going to stop buying what they want or need.

Yes, there will be some, but that doesn't mean the entire population is going to stop buying what they want or need, even though they might not feel good about what is going on.

So businesses need to make sure they don't read all of the indexes about how consumers are feeling bad and just provide the best products and services they can and just keep moving on.

Article:

The Cabinet Office downgraded its basic assessment of the index, saying the consumer confidence has been "stalling." In December, when the index fell 0.1 point, the office said sentiment "continued to pick up."

During the Jan. 7-20 survey period, daily coronavirus cases in Japan shot up to record highs, surpassing 45,000 cases.

As the highly transmissible Omicron variant spread, the government decided to put Tokyo and other prefectures under a coronavirus quasi-state of emergency, which allows the governors to ask local restaurants and bars to close early and stop or limit the serving of alcohol.

Ideas:

While it might be important to have some kind of continued emergency measures, it seems its the small restaurants, bars, and other places that always seem to be effected most by the emergency measures.

But of course consumers at the same time might be limiting their shopping at departments and other places as the omicron situation worsens.

And then there might be some consumers and others in society who are tired of the virus situation and might try to ignore the situation and go about their daily activities like is normal, with of course means wearing their masks.

And as more people get the booster shot they might think they are OK and are not going to worry too much about it.

But I've talked to two people in Tokyo recently were either had the two vaccinations and even the booster shot, and they still got the omicron virus. But fortunately for them, they both had mild cases and recovered within a week.

Article:

In addition to increasing COVID-19 cases, "price hikes of daily necessities since last year dampened sentiment," a government official said.

Among the survey's four components, consumers' assessment of livelihoods fell 1.8 points to 36.8 following a 0.5 point rise in December, while their readiness to buy new durable goods sagged 2.2 points to 34.3 after remaining unchanged at 36.5 in the previous month.

The survey showed a total of 89.7 percent of households expected consumer prices to rise in the year ahead, with 31.3 percent predicting it to accelerate by 5 percent and higher. The total figure, which matched that logged in March 2014, was the highest since comparable data became available in April 2013.

The consumer confidence survey covered 8,400 households, including 2,688 single-member households, with valid responses received from 6,732, or 80.1 percent.

Ideas:

When there is a price hike in some products or services, consumers might think what they want to do or can do such as finding substitutes or other products of the same quality at a lower price. 

Most likely households purchased household durable goods in 2020 when there was a big increase to work from home or families stayed at home more instead of going out and so in 2021 and in 2022, maybe consumers/households don't see the need to buy durable goods again at this time.

But with some daily necessities it might not be possible to find subsitutes so consumers might still have to buy them, which then cuts into their extra or disposable income after their weekly or montly household bills are paid.

There is also the problem with those on fixed incomes and the increase in the price of daily necessities. Their fixed income is now challenged even more and the government perhaps should find ways to help them, in any way possible if prices begin to get too high.

In this case the need for increases in salaries of workers this April is even more important if prices do increase by 5 percent or more this year. Otherwise the livelihoods of citizens are going to decrease even more in the coming year.

An increase in prices without a egual increase in overall consumer demand in the Japanese economy is not going to help the Bank of Japan reach its 2 percent target. 

Yes some kind of inflation is increasing but most likely its not the kind that the BOJ wants or needs in the Japanese economy. 

What the Japanese economy needs is sustained consumer demand and not sustainded prices increases, unless the prices increases are the result of consistent sustained demand. 

But most likely that is not going to happen unless consumers/households can get some kind of substantial increase in wages.

Have a nice day and be safe!