Japan's GDP grows 3.1% in April-June as consumption rebounds
Ideas:
Japan's GDP seems to be on roller coaster ride lately with a couple quarters up and then a couple quarters down, as it not very consistent.
The inflation-adjusted annual rate is just what would happen if the Japanese economy grew at the same rate each quarter, but that is usually not the case as its often very inconsistent.
Private consumption or private spending is never where it should be in Japan as Japanese households never spend like US consumers, as Japanese consumers, for the most part, are more savers then spenders.
Capital spending by companies is usually related to business sentiment, and how businesses feel about the future.
While the Japanese government gave subsidies and tax cuts of 40,000 yen, it doesn't go that far when inflation increases every month, and the 40,000 can be used up very fast in one month.
Japan, for many years and maybe decades didn't see much inflation, so its probably been hard for Japanese households who were more suited to deflation or decreased prices.
Again the stronger-than-expected GDP growth, while not be negative, is not usually the situation in Japan, as the Japanese economy has been stagnant for a very long time.
The auto scandal related to auto testing discrepancies might have abated but the auto industry is going to be watched more closely for now on, and the Japanese government doesn't want another industrial scandal in Japan.
Ever since the pandemic prices have continue to increase in Japan, and it seems, at this time, there is no end in sight for the decrease in prices or even the leveling off of prices.
Domestic demand has never reached it full potential in Japan as, again, Japanese consumers more savers and not big spenders like US consumers.
Private consumption or consumer spending is never that strong in Japan, and recently because of continued inflation, its even less strong.
It might account for half of Japan's GDP, but most likely the level of spending in Japan is never that much, or never that much recently.
Strong demand for cars, while good, is never an everyday thing, as durable goods, such as cars, are not bought everyday but maybe just every few years, if even that.
Capital spending is sometimes hard to figure out as what are companies in Japan doing exactly. For example there is a so-called labor shortage in Japan, and are companies trying to increase their hiring, or are they just tying to use automation to overcome the labor shortage?
Ordinary people sometimes might feel disconnected from all of the news about increased exports and a strong trade surplus, as sometimes there seems to be two different economies related to Japan, one being export and the trade surplus and other being the high prices due to the weak Japanese yen, and which is causing import prices to be high.
Wage increases are good and needed, but the challenge is as 70 percent of most Japanese don't work for large name-brand companies, the small and midsize workers might not have gotten the same wage increases, which means consumer spending might not be where it should be.
But that is a market economy where not everything is equal and there are some who benefit and some who are not so well off.
Prime Minister Kishida can ask companies to increase wages, and some have or many have, but the challenge is maybe some companies and their profit margins just can't handle any real wage increases as they are struggling with high energy and raw material costs.
And then add in the so-called labor shortage, which means companies now that to pay even more for workers and there is a competition for the best talent available in Japan.
The 40,000 yen income tax cut and or subsidy, again, doesn't go very far and inflation can eat into the 40,000 very fast in Japan.
There was strong wage growth for large companies in Japan, but maybe not for the small and midsize companies in Japan, as the most likely got lower wage increases.
And then there is a huge segment of part-time workers and contract workers who never get the same benefits and large company workers so they might have gotten even less in wage increases, if anything at all.
Demand for cars in the US continues to be strong, as the news of a possible recession was muted with new data so the US economy continues to be the strongest economy in the world at this time.
The Japanese economy seems to be stuck or stagnant for many reasons, such as the low birthrate, lack of favorable immigration policies, and the lack of productivity or innovation among the traditional Japanese companies.
Most likely the high-tech companies are doing their part in increasing productivity and innovation, but the problem seems to be the large traditional companies which are dragging down the Japanese economy.
Maybe it was inevitable that Japan would lose its 3rd place to Germany or any other country, as maybe the US would lose its place to India or China in the future.
Have a nice day and be safe!
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