Japan Household Budget Challenges: Updated March 3, 2024.

 

Japan household budget burdens to rise by $200 per person in 2024: estimate

Article Source: https://mainichi.jp/english/articles/20231230/p2a/00m/0bu/025000c

Ideas:

Maybe spread out for a year $200 might not be that much, but then again, for some Japanese households it might be too much onto of the continued inflation situation.

Real wages like the real economy is what is relevant for the average Japanese household, as GDP, record high stock market might not mean anything to the average Japanese.

But then again, inflation and budget concerns are very much individual from household to household, and of course it depends on how each household spends and how much are their costs related to energy, grocery shopping and so on.

The flat tax cut sounds good, but is each household going to get the tax cut in cash of is it just a tax cut in the taxes each person or household usually pays?

A cash handout of 40,000 yen would be good, but if each household could get it the cash and then they could use how the think is best.

Inflation slowing from 3.1% to2.4% might not even be noticeable for most households as maybe don't follow or think about how much inflation really is but in real terms, how much they have to pay related to food purchases and energy payments, then yes then they see it going up and maybe down in 2024.

The Japanese government should keep the energy subsidies through 2024, along with the tax cut and handout to low-income families as a way to really insure that inflation is finally lowered.

And of course, if wage increases are significant enough in April 2024, which might mean consumer demand and consumer spending might get back to some kind of normal.

But all companies need to increase wages and not just large companies, but small and midsize companies too need to do what they can.

Price controls are good, for example on daily necessities such as milk, eggs, flour, but can't be used for very a long time as they disrupt the normal flow of a market economy.

Japan is a resource-poor country and has to import much of what it needs, and of course is subject to global prices and then the variance between the US key rate and the Japan key rate has made the Japanese yen very weak, which means import prices are very high in Japan.

Even though the US hasn't increase its rate for three consecutive meetings, the variance is still very high at this time.

The Bank of Japan might be signaling it might begin to think about how to change it ultra-low policy, but as we move into 2024, the news is the Japanese economy has slipped into another recession, which could affect what the Bank of Japan is going to do about its low rate policy.

There are a lot of "ifs" related to this paragraph as anything can happen. For example the July-Sept. quarter was negative growth for Japan, and many were saying that Oct.- Dec. would see improved growth, but the opposite has actually happened as the Oct-Dec. quarter was negative growth too, which meant the Japanese economy has slipped back into a recession.

The Japanese yen, might become stronger, but at the same time, the Japanese economy might still be in a not so good place with it not growing.

And then there is the idea of the weak yen bringing in more foreign tourists and the weak yen, improve their purchasing power.

If the weak yen gets stronger, which is good for the domestic economy, the Bank of Japan has to decide what is best overall of the economy, a weak yen which helps exporters and foreign tourists or a strong yen which helps the domestic economy and importers. Maybe something in the middle that helps everyone.

Have a nice day and be safe!