Japan Economy Averts Recession: Updated March 15, 2024.

 

Japan averts recession in Oct.-Dec. with 0.4% economic growth

Article Source:  https://mainichi.jp/english/articles/20240311/p2g/00m/0bu/011000c

Note: It was suggest that Japan had entered a recession after initial data was released, but after the revision, it looks like Japan didn't enter a recession.

Ideas:

Many times government stats agencies will give an initial report about the economy, and then later revise it as new data becomes available and or new stats have shown different results.

It is hoped that the new data is not a political idea to make the Japanese economy look better than what it really is.

Japan's fall from number 3 has been a long time coming, as Japan has been in deflation mindset for a very long time.

Most Japanese probably don't even know or feel anything from 3 to 4 in world rankings, as it doesn't really affect their daily lives.

There is a catch 22 situation here. For example the government is worried about inflation and the lack of vigor related to consumer spending. But at the same time, when wages do increase, and companies have to pay for the wage increases by increasing prices, what are consumers going to do then.

And then if and when consumer demand and consumer spending increases, maybe, what are consumers going to do when companies begin to increase prices because of increased demand and increased consumer spending.

Will consumer spending increase, decrease, or lack vigor and that is the question as the Japanese economy comes out of the stagnation and deflation mindset.

Private consumption or consumer spending has never been a strong economic driver in the Japanese economy, as consumer spending just isn't where it should be for a economy of 125 million people.

Japan just doesn't spend as much compared to the US due to maybe a large number of elderly, and it just hasn't been in the nature to spend like US consumers., as Japanese are, or used to be more savers than spenders.

At the same time, because of inflation, more married women, have taken jobs to help families survive in Japan. 

But the jobs women get in Japan are low-level service jobs and not management level jobs, as Japan is one of the worst work environments in advanced countries.

Japan is in the middle of a sever labor shortage and innovation and new technologies are needed to help overcome the shortage.

Also companies are and need to increase wages to attract more workers for their companies, but they also need to provide better benefits and better work/life experiences, that younger workers want these days.

If there is significant wage growth in April of 2024, how much will companies increase prices. to cover the wage increases, or will they use their huge sums of cash they are sitting on for wage increases only.

The challenge is up to 70 percent of the Japanese workers don't work for large Japanese companies, which in April of 2023, gave more of the significant wage increases.

So what is going to happen in 2024, are just large companies, again only, going to give wage increases or all or most companies give wage increases.

If not, there is going to have two-tiered economy of haves and have nots and consumer spending among all income groups is not going to be balanced.

Have a nice day and be safe!