Japan Household Spending:

 Article Source:  https://mainichi.jp/english/articles/20220405/p2g/00m/0bu/021000c

Article:

TOKYO (Kyodo) -- Japan's household spending rose a real 1.1 percent in February from a year earlier for the second straight month of increase, but any recovery remained weak as COVID-19 restrictions caused people to refrain from eating out as often and buying products like clothing, government data showed Tuesday.

Average spending by households with two or more people was 257,887 yen ($2,100), the Ministry of Internal Affairs and Communications said.

The latest data is exaggerated by a 6.5 percent drop in expenditures in the same month last year when Tokyo and some prefectures were under a state of emergency entailing a request to refrain from nonessential outings.

Ideas:

Household spending is a little like exports in that is the volume or the value that has increased. 

When we hear about exports each month and there is an increase has the volume increased or has the value of exports in increased.

So now with inflation increasing in Japan, and globally, as household spending increased 1.1 percent, how does that match with the increase in the CPI at 2.1 percent. 

Meaning again has the actual amount of spending increased or do consumers now have to use more money to pay for things.

So like many stats a weak 2020 maybe made 2021 look better in terms of GPD and now a not so good 2021 in terms of household spending has made the 1.1 increase look better than maybe it really is.

Article:

The increase in February, which follows 6.9 percent of growth in January, does not mean spending has been robust as many of the country's 47 prefectures were under a quasi-state of emergency in the month due to the worsened COVID-19 situation, a ministry official said.

Seasonally adjusted spending in the reporting period dipped 2.8 percent from the previous month following a 1.2 percent decrease in January. The government implemented COVID-19 restrictions in some prefectures in early January to curb the spread of the Omicron virus variant before they were expanded later in the month.

By component, spending on fuel and utilities expanded 1.9 percent from a year earlier reflecting colder-than-usual weather in some areas, up for the first time in 11 months.

Ideas:

Household spending or consumer spending is never that robust in Japan as the Bank of Japan is usually very pessimistic on consumer spending as its never where is should be for an econmy which is the 3rd largest globally.

And not only cooler-than-usual weather but energy prices have been increasing in Japan and an increase of 1.9 percent might be the tip of the iceberg for what is going to happen in the coming months.

Companies can only absorb so much of their costs and has energy and raw material prices continue to increase they will have to eventually start to pass-on some or all of thier costs to whomever is next in the supply chain and also maybe the final consumer or households.

Article:

The official added more data is needed to determine how much a recent surge in energy prices has impacted the spending in this area.

Outlays on culture and recreation rose 5.6 percent for the second straight month of increase as spending on domestic tour packages increased from the previous year. Compared to a pre-pandemic level in February 2019, however, spending on such trips was down 71.3 percent, the ministry data showed.

The quasi-state of emergency reduced the number of customers to restaurants and home improvement stores, causing spending on food, including eating out, to fall 3.6 percent and that for furniture and household goods by 5.0 percent.

Ideas:

Officially more data might be needed but just look around, talk to the average person, family, or business and see what they say about their increased costs related to food, home energy costs, gasoline prices, and raw material costs, energy costs at businesses and so on.

You don't need extra data to see what is really happening in Japan and globally, its out there and its effecting people's lives everyday.

Even the domestic tourism industry is not back where it should be yet.

But talking to a CEO of a major construction and engineering company, hotels and other places are now beginning to increase their invesments and spending now that the pandemic is beginning to subside.

Again consumer spending is not where is should be. Consumers and households are continuing to see increases in restaurant prices and as such they are decreasing the amount they spend going out. 

But at the same time, supermarket prices are also increasing meaning they are being hit in an increase in restaurant prices and increase in supermarket prices.

Article:

The average monthly income of salaried households with at least two people in February inched down a real 0.1 percent from a year earlier to 540,712 yen, down for the first time in seven months.

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

Ideas:

Most likely the average Japanese consumer has not seen increases in prices like this in over 30 years, as deflation has been the king in Japan since the asset bubble crash of 1980/1900.

So as prices continue to increase maybe its time for Prime Kishida and the Finance group to consider an extra budget or budget help those in need or even help the average family as if prices continue to increase consumer spending in Japan is going to take a big hit in the future.

Its understandable that the Japanease government feesl constrained because of its huge debt to GDP ratio but if price increases continue to increase the future the Japanese government has got to do something if they don't want another GPD contraction in the new few quarters which will lead to a real recession.

Consumer spending is not going to be maintained at a level that is going to sustain GDP growth as Japan is having major challenges in the manufacturing areas due to the chip shortage and exports have not been that robust lately too.

Have a nice day and be safe!