Japan Household Spending in June: Ideas Later.

Japan's household spending in June falls 3.3% on year

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Article:

TOKYO (Kyodo) -- Japan's household spending in June fell a real 3.3 percent from a year earlier, marking the seventh consecutive monthly drop, partly due to unfavorable weather such as multiple typhoons, heavier rainfall and lower temperatures, government data showed Friday.

Households of two or more people spent an average of 290,886 yen ($1,840), the Ministry of Internal Affairs and Communications said.

By category, spending on food and beverages dropped 2.5 percent, driven by a decline in sales of tea beverages and sports drinks due to lower temperatures than a year earlier.

Outlays for dining were down 2.9 percent, declining for the first time in three months, as there was one fewer Sunday than a year earlier and due to poor weather conditions amid the typhoons and the rainy season, a ministry official said.

Consumable goods expenditure fell 8.0 percent, declining for the first time in four months.

Amid a significant real increase in spending on plastic bags and plastic wrap since March due to the situation in the Middle East, the official said bulk buying showed signs of easing, with expenditure settling down to a real 1.4 percent increase in June from a year earlier, compared to the 33.1 percent surge in May.

Spending on transportation and communication sank 5.7 percent, due in part to declines in air and rail fares. The official also noted that consumers may have refrained from traveling due to the unfavorable weather as well as the one fewer Sunday.

The data is a key indicator of private consumption, which accounts for more than half of the country's gross domestic product.

The average monthly income of salaried households of at least two individuals increased a real, or inflation-adjusted, 2.0 percent to 1,013,986 yen, according to the ministry.

Article source:  https://mainichi.jp/english/articles/20260807/p2g/00m/0bu/005000c

Japan Planned Food Cuts: Ideas Later.

Japan's planned food tax cut faces consumer, retailer skepticism

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Article:

TOKYO -- Japan's Cabinet on Aug. 5 approved a policy to cut the consumption tax rate on food and beverages from 8% to 1%. However, with prices continuing to rise and the reduction set to apply for only two years from April 2027, the plan has drawn a cool response from consumers and retailers. The restaurant industry, where the 10% rate is expected to remain in place, has also voiced concerns about the impact. Will Japan's first consumption tax cut since the tax was introduced prove effective?

"When it returns to 8%, the impact will be substantial, so I can't simply welcome the cut," said Emi Hashimoto, 42, a financial planner in Tokyo's Shinjuku Ward who is raising six children, from a first grader to a second-year high school student.

With her children at growing ages, the family's monthly food bill, excluding meals out, comes to about 100,000 yen (roughly $630). In 2024, she managed to keep the monthly total to around 60,000 yen (approx. $380), but relentless price increases are now weighing heavily on the household budget.

The tax cut would theoretically reduce the family's monthly burden by about 7,000 yen (around $44). But Hashimoto is skeptical.

"Stores that have held off on raising prices may do so when the tax cut takes effect, and the costs of adjusting to the new rate may also be passed on to consumers," she said. "I doubt we'll actually save the full 7,000 yen."

"In the end, the tax cut is essentially another giveaway," she added. "Rather than spending so lavishly, the government should tighten its belt, eliminate waste and stop unnecessary spending."

Retailers weigh the impact

The more consumers spend, the greater the benefit they would receive from the tax rate cut. But how do retailers selling high-end food products view the measure?

About 40 pieces of Wagyu beef are displayed at Tokyo Cowboy, a butcher shop in Tokyo's Setagaya Ward. Popular items include cuts such as "ichibo," or top sirloin cap, and "misuji," or top blade, priced at around 2,500 yen (roughly $16) per 100 grams.

A 600-gram purchase for a family would cost 15,000 yen (about $95), with the tax cut reducing the consumption tax by 1,050 yen (roughly $6.70). The benefit may appear substantial, but the shop is not entirely optimistic.

According to company President Nozomi Ueno, 53, many customers place greater importance on the quality and value of the meat than on its price.

"It's hard to imagine the tax cut producing a major boost in foot traffic," he said.

Although the tax burden on purchases by the shop would be reduced, continued increases in the cost of ingredients and packaging materials could still force it to raise prices.

"I don't know whether we'll be able to pass the full savings on to customers," Ueno said.

Concerns in the restaurant industry

The proposed cut is expected to follow the reduced-rate system introduced in October 2019, excluding dine-in meals. If so, the tax rate on dine-in meals would remain at 10%, while the rate on takeout food would fall from the current 8% to 1%, widening the gap.

On July 14, the Japan Foodservice Association and other industry groups issued an "emergency message on reducing the consumption tax rate on food products."

They warned that the difference in tax rates "would put dining out at a price disadvantage, affect the many job roles that sustain the food service industry and place a heavy burden on the management of various restaurants."

An association official said, "Restaurants have told us they are concerned that the difference in tax rates will discourage consumers from dining out."

A 53-year-old man who operates a stand-up soba shop in Tokyo said, "The tax cut may lower my purchasing costs, but considering how customers would react if I raised prices when the tax rate returns to 8% in two years, I can't lower my prices this time."

Facing higher operating costs, he had just increased the price of a basic bowl of hot soba from 430 yen (about $2.70) to 480 yen (around $3) in June.

"I just hope we won't have to compete with takeout businesses covered by the tax cut or with restaurants that lower their prices," he said.

Article source:   https://draft.blogger.com/blog/post/edit/2653803302921314930/1150161409062193337

Japan Editorial: Ideas Later.

Editorial: Japan needs basic economic policy review, not reliance on US, to stop yen's slide

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The responsibility for securing confidence in the yen as a currency rests with the Japanese government. Relying on the United States will not overcome the negative spiral of a weaker yen and higher prices.

In response to the yen's historic depreciation, the Japanese and U.S. governments have moved to buy yen in the market. It is the first coordinated intervention in 15 years, since 2011, when the yen surged immediately after the Great East Japan Earthquake. It is the first yen-buying intervention in 28 years, since 1998, when Japan fell into a financial crisis over bad-loan problems at Japanese banks.

Such a move is unusual outside of a major disaster or a global economic crisis. That is because it could distort financial markets.

This time, the political calculations of Prime Minister Sanae Takaichi's administration and the administration of President Donald Trump in the United States aligned. Japan had repeatedly intervened on its own to buy yen and sell dollars, but those efforts failed to correct the yen's weakness, and Tokyo had been hoping for help from Washington.

With congressional midterm elections coming in November, the United States was concerned that the negative effects of "selling Japan" -- a simultaneous weakening of the yen and rise in long-term interest rates -- would spill over into its own economy. U.S. Treasury Secretary Scott Bessent, who led the coordinated intervention, was deeply wary that turmoil in Japanese markets would push up U.S. long-term interest rates.

Japan has, in effect, incurred a major debt to the United States. President Trump has been emphasizing that Japan "wanted a little bit of help." Washington may seek something in return, such as the early completion of the $550 billion, or about 86 trillion yen, in investment in the United States that Japan promised under the Japan-U.S. tariff agreement.

The Takaichi administration is touting the move as "the completed form of the Japan-U.S. currency alliance," but intervention alone will not easily reverse the stream of yen selling.

At the root of the yen's weakness is market distrust of the Japanese government's economic policies, which disregard fiscal consolidation and independent monetary policy.

The U.S. side argues that an early interest rate hike is essential to correcting the yen's weakness. Monetary policy, however, is something the Bank of Japan should decide. To put the brakes on the weaker yen and higher prices, it is only natural to raise the policy rate, which is far too low relative to the inflation rate.

It is also essential that the Takaichi government change its irresponsible fiscal policy. If it forces through a consumption tax cut without identifying a funding source or presses ahead with fiscal expansion, long-term interest rates will rise further.

There are limits to the stopgap method of coordinated intervention. It is time for the Japanese government to review economic policy itself to restore market confidence.

Article source:  https://mainichi.jp/english/articles/20260805/p2a/00m/0op/017000c

Japan Real Wages: Ideas Later.

Japan real wages in June rise for 6th straight month on summer bonuses

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TOKYO (Kyodo) -- Japan's real wages in June rose 1.6 percent from a year earlier, increasing for the sixth straight month in the longest positive streak since a seven-month run in 2021, reflecting higher summer bonuses, government data showed Wednesday.

Nominal wages per worker, including base and overtime pay, were up 3.4 percent at 531,677 yen ($3,370), marking the fifth straight month of growth exceeding 3 percent and the first such streak in more than 34 years, the Ministry of Health, Labor and Welfare said.

The latest growth in inflation-adjusted wages matched an upwardly revised 1.6 percent rise in May and came as the inflation index used for the data climbed to 1.9 percent in June from 1.7 percent in the previous month.

Wage growth was supported by a 3.5 percent increase in special earnings, mainly bonuses, to 232,445 yen, as this year's robust "shunto" labor-management negotiations kept pressure on the corporate sector to raise pay.

Data released Tuesday by the Japan Business Federation, the country's largest business lobby known as Keidanren, showed that major companies agreed in the talks to raise wages by 5.37 percent on average, surpassing 5 percent for the third straight year.

The organization also said summer bonuses at major firms were up 1.88 percent on average from a year earlier on the back of healthy corporate profits, topping 1 million yen for the first time since comparable data became available in 1981.

While the yen's sharp fall has pushed up import costs, Japan's consumer prices have remained below 2 percent due in part to government measures to keep down gasoline and other energy prices, helping real wages to stay in positive territory.

Economic analysts, however, warn that the pace of inflation in resource-poor Japan is likely to accelerate later this year as more companies are expected to pass on rises in raw materials and labor costs to retail prices.

Solid wage growth and stable price increases are key conditions for the Bank of Japan to continue lifting interest rates as it seeks to normalize its monetary policy after a decade of unorthodox easing that ended in March 2024.

The central bank left the benchmark policy rate unchanged at 1.0 percent at its meeting last month, but Governor Kazuo Ueda signaled more rate hikes, flagging upside risks to inflation and citing factors including the weaker yen, which drives up import costs.

Article source:  https://mainichi.jp/english/articles/20260805/p2g/00m/0bu/017000c

Japan Food Exports: Ideas Later.

Japan farm, food exports up 10.9% to record high in 1st half of 2026

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TOKYO (Kyodo9 -- Japan's exports of agricultural, forestry and fishery products and food products in the first half of 2026 rose 10.9 percent from a year earlier to 897.7 billion yen ($5.7 billion), a record high for the period, the government said Tuesday.

Shipments to all of Japan's top 10 destinations, including the United States and Hong Kong, exceeded year-before levels, pushing the overall total to a new January-June peak for the second straight year.

By product, green tea posted a notable gain, supported by a global matcha boom, with the Ministry of Agriculture, Forestry and Fisheries saying that growing inbound tourism has raised overseas awareness of Japanese food.

Rising health consciousness also contributed, while new sales channels expanded at supermarkets and restaurants abroad that had not previously handled Japanese food. But the pace of export growth slowed from 15.5 percent in the first half of 2025.

Among the top 10 destinations by export value, eight countries and regions, apart from second-ranked Hong Kong and third-ranked China, marked first-half records. Exports to Hong Kong increased 3.0 percent, while those to China grew 4.3 percent.

Exports to South Korea rose 20.5 percent, with yellowtail and beer showing solid gains, while those to Vietnam jumped 35.4 percent on strong demand for scallops and mackerel. The United States ranked first, up 15.3 percent to 162.6 billion yen.

Green tea, beef, apples, and sauces and mixed seasonings registered record highs for the January-June period. Green tea surged 83.5 percent to 48.2 billion yen, while yellowtail surged 69.0 percent to 43.4 billion yen.

Demand for the tea as an ingredient for lattes and sweets grew. Yellowtail exports to North America and South Korea remained firm, while prices increased. Rice exports fell in volume terms due to shortages but rose in value to a record 7.5 billion yen on higher prices.

Article source:  https://mainichi.jp/english/articles/20260804/p2g/00m/0bu/030000c

BOJ Keeps Key Interest Rate Unchanged. Ideas Later.

BOJ keeps key interest rate unchanged, lifts economic outlook for FY 2026

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TOKYO (Kyodo) -- The Bank of Japan on Friday kept its benchmark interest rate unchanged at around 1.0 percent after raising it to a 31-year-high last month while revising upwards its economic outlook for the current fiscal year, which started in April, despite ongoing Middle East tensions.

After a two-day policy meeting, the central bank said it will continue to raise the rate to stably achieve 2 percent inflation target, vowing to adjust the timing and pace by examining the Middle East development, expansion in artificial intelligence-related demand and the developments in foreign exchange rates.

In the latest quarterly economic outlook report, the central bank said it expects the Japanese economy to grow 0.6 percent in fiscal 2026, compared with its earlier projection of a 0.5 percent expansion.

While the U.S.-Iran conflict is expected to weigh on economic activity for fiscal 2026, the economy will be supported by factors such as the increase in global AI demand, the BOJ said.

For fiscal 2027, the central bank lifted the outlook to an expansion of 0.8 percent compared to 0.7 percent forecast earlier, noting that the negative effects of high crude oil prices will wane and that a "virtuous cycle from income to spending will gradually intensify."

Core consumer prices, excluding volatile fresh food, are estimated to rise 2.5 percent in fiscal 2026, against the 2.8 percent forecast in April.

With businesses continuing moves to pass on wage increases to sales prices, high crude oil prices and a weak yen, the bank said the consumer price index is likely to "accelerate to a level clearly above 2 percent from the second half of fiscal 2026."

"As for underlying CPI inflation, there is a risk that it will deviate upward to a level above the price stability target of 2 percent," it said in the report.

Of the nine Policy Board members, Hajime Takata voted against the action to keep the key short-term interest rate unchanged and called for a hike to around 1.25 percent, citing the need to respond to upside risks to prices.

Article source:  https://mainichi.jp/english/articles/20260731/p2g/00m/0bu/022000c

Japan Possible Cut in Food Tax: Ideas Later.

Japan PM Takaichi eyes cutting consumption tax on food to 1% from April

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TOKYO (Kyodo) -- Prime Minister Sanae Takaichi said Thursday that Japan will cut the consumption tax rate on food and beverages to 1 percent from the current 8 percent for two years starting next April, marking the first reduction since the system was introduced in 1989.

The tax cut will be coupled with cash handouts to low- and middle-income earners to "effectively reduce the tax burden to zero," which is "the best option" to support households struggling with higher prices, Takaichi told a press briefing at her office.

The plan was unveiled earlier in the day at a meeting of executives of the ruling Liberal Democratic Party led by Takaichi, who instructed senior LDP officials to secure the party's endorsement and pave the way for Cabinet approval by early next month.

Amid already high government bond yields and a weak yen, the tax cut could further fuel concerns over Japan's fiscal health, as the measure would create a gaping hole in social security funding, with the loss of tax revenues reaching about 10 trillion yen ($61 billion) over two years.

Takaichi, who is pursuing expansionary spending to spur economic growth, has yet to identify a specific revenue source to offset the tax cut, but told reporters the government will secure the necessary funds through fiscal "reforms" and "without (issuing) deficit-covering bonds."

Acknowledging that the consumption tax is a vital source of funding for social security, Takaichi said, "I will take full responsibility for restoring the tax rate to its original level two years after (implementing the cut) to ensure fiscal sustainability and maintain market confidence."

Takaichi's tenure as LDP head, however, will expire in fall 2027, meaning it is uncertain whether she will remain prime minister in spring 2029.

LDP Secretary General Shunichi Suzuki told reporters earlier Thursday that Takaichi explained her decision to party executives, who unanimously approved it. The party aims to have related bills approved during an extraordinary Diet session likely to be convened in the fall, he added.

The LDP's junior coalition ally, the Japan Innovation Party, also agreed to Takaichi's tax cut plan and will cooperate on it when the two parties' senior officials hold talks, JIP Secretary General Hiroshi Nakatsuka told reporters.

Meanwhile, some LDP members openly expressed their opposition. Former Foreign Minister Taro Kono told reporters that there is "no guarantee" the planned tax reduction will lead to lower food prices and that they could "spike significantly" when the tax rate is restored to its original level two years later.

Yuko Obuchi, former LDP election strategy chief, has resigned as a senior member of an informal meeting under the LDP's research commission on the tax system in protest at the tax cut plan, sources familiar with the matter said.

She is known for emphasizing fiscal discipline. Her father, the late Prime Minister Keizo Obuchi, served as chief Cabinet secretary under Prime Minister Noboru Takeshita, whose government introduced Japan's 3 percent consumption tax 37 years ago.

The LDP, led by Takaichi, scored a landslide victory in the House of Representatives election in February on pledges that included rapid consideration of slashing the consumption tax rate on food and beverage products to zero for two years. The JIP and many opposition parties made similar promises at that time amid elevated prices.

But the ruling parties decided to change course and seek a cut to 1 percent after learning at a cross-party meeting about taxation and social security that adjusting retailers' cash register systems to a zero rate would require more time.

To fulfill the campaign pledge of a zero tax, cash handouts to low- to middle-income households would total 600 billion yen annually, which is equivalent to the revenue from a 1 percent tax rate on food and beverage items.

With opposition parties arguing that a de facto tax rate hike eventually awaits the public because the cut is a temporary measure, the cross-party meeting, called the national council on social security, failed to reach a consensus following monthslong discussions, leaving it up to the prime minister to decide.

While Takaichi has vowed to reinstate the tax rate after two years, which may mean April 2029, it could become a politically risky move given that a House of Councillors election is slated for the summer of 2028.

The ruling bloc refers to the two-year tax cut scheme as a "transitional measure" until the new income-linked relief program for lower-income workers is introduced in fiscal 2029. The program was approved during the cross-party talks.

Japan's consumption tax rate has gradually increased, mainly to finance mounting social security costs as the population rapidly ages. The rate started at 3 percent, increased to 5 percent in 1997, and rose to 8 percent in 2014.

Since 2019, the rate has been set at 10 percent, but a reduced rate of 8 percent has been applied to food and beverage sales, excluding alcoholic beverages and dining out.

Article source:  https://mainichi.jp/english/articles/20260730/p2g/00m/0na/023000c

Japan Govt. GDP Growth Outlook: Updated Aug. 7, 2026

Gov't cuts Japan's FY 2026 GDP growth outlook to 0.9% on higher oil price

Ideas

Japan is a very mature economy and is never going to see economic growth of 2 or 3 percent ever again as it takes more and more resources to grow an economy as an economy gets larger and Japan with projected growth of just 0.9 percent is still a lot of growth for a economy like Japans.

Japan's fiscal health, recently the last few decades, is always in question as Japan has one of the highest debt to GDP ratios among advanced nations but its true that there will be a surplus of 1.4 trillion yen, that is good for an Japan as it needs to reduce its debt if it can.

The Japanese Prime Minister is a fiscal dove which means she is using a lot of government spending to try and get the economy moving again, but there is a downside and it increases government debt which the financial markets don't like to see, knowing how much debt the government has now.

But at the same time, government may feel they have no choice but to spend and try and get the economy moving if other variables such as consumer spending or business investment/spending is not enough. 

And then there is the idea of exports, which is a major economic driver for the Japanese economy but is always being subtracted due to Japan being a resource-poor country and has to import much of what is needs causing the affect of exports to be much less than needed for the economy.

Yes, it might seem the projected surplus is going to help reduce the existing government debt but there is so much debt now that will only help but not in a significant way to really reduce the debt, as the Japanese government just keeps spending with new program and budgets as they have always done.

And of course there are always, it seems, new supplementary budgets that might be needed in some cases but continue to increase the debt that Japan has now.

The weak Japanese yen is both a positive and a negative for the Japanese economy as it helps export companies but hurts importers and others as it drives up costs in the overall domestic economy in Japan.

Of course wage growth in Japan is long overdue and companies have kept a mindset of not increasing wages for a very long time as now company employees just might begin to feel like they can start spending their wage increase in the economy again, and yes, government subsidies do help with increasing the disposable income of Japanese households and helps them spend a little more in the economy.

Japan has always been vulnerable to an increase in global prices but what is a little strange is Japan only has a few free trade agreements that can help reduce global prices.

You would think Japan would try to get as many FTA's as possible to reduce import and global prices but unfortunately it seems there are many political roadblocks that have prevented them to do so.

And of course there is always the need to sound optimistic in order to keep the domestic and global financial markets happy even though a lot can change by next April.

The Japanese government is no exception as they are always coming up with new phrases and slogans that sound good but for the most part, don't really live up to what they were meant to do.

The investment allotment might be a very good idea but of course there could be many variables that might constrain the original idea as next year is still a long way off.

The investment allotment, again, sounds but at the same time, there might be too much political influence as to who gets chosen and who doesn't as usual politics might get in the way of a good idea.

There is a long time to go before the plan is implemented which means, as most political decisions go, there could be many changes before than and now.

Have a nice day!

Article source:    https://mainichi.jp/english/articles/20260730/p2g/00m/0bu/013000c

Japan Minimum Wage Hikes: Updated Aug. 6, 2026.

Japan hikes FY2026 average minimum wage guideline by 4.9% to 1,176 yen

Ideas

Increasing the minimum wage can be seen as both a positive or a negative depending on if you are part-time worker or a owner of a company that has to pay the increased minimum wage.

Part-time service workers, those who work in the service sector industry are usually the ones to get the minimum wage and of course the minimum wage is a cost or increased cost for companies and many, while they might want to see their employees get a higher income don't want or can't afford an increase in their profit margins.

Yes, that is exactly the challenge of giving workers an actual living wage and at the same time show some consideration for small and mid-size companies who usually have razor thin profits margins and can't really afford even a 55 yen increase in their costs.

This is where the government, if at all possible, should find a way to help out both groups as it seems there is an estimated 36 percent of all workers in this group and that means if they can't get a better wage, they of course really can't spend much in the economy which means less consumer spending and less growth for the economy.

The larger metro areas in Japan of course will get a higher minimum wage, as the cost of living in the large metro areas are more expensive but at the same time, even the small rural areas might have a large significant minimum wage group that also needs consideration as they too have to pay bills and feed their families.

But of course there is still the challenge with small and mid-size companies and what to do about them or for them as the government, doesn't seem to be doing much really to help them, but at the same time is it the responsibility of the government, in a market economy, to help every small and mid-size company that needs help.

But comes a point or a time, when its time to say enough is enough, and we, the government, for the good of society and the economy, need to step in with subsidies or programs, that actually do something to help small and mid-size companies who just don't have the needed resources to handle all of the increase in costs such as material costs, energy cost, and of course increased labor costs.

It is estimated that 99 percent of all companies in Japan are small companies and if a large or significant number of them can't pay their bills and are increasing faced with some kind of bankruptcy, what does that say about society or a government that doesn't find a way to help them in their time of need.

Unfortunately Japan's present day minimum wage is the 5th lowest among all OECD countries which means it has a long way to go to catch up with all the other advanced economies as it just shows how far Japan has fallen since the 1989 asset crash, when the Japanese economy was at its highest point.

But of course yes, the more rural regions have lower overall cost situation but at the same time, there are still people/workers there who need a higher minimum wage as they to have to take care of their families and or pay their bills.

Yes, again, companies are faced with not only an increase in possible minimum wage increases but also an increase in material costs and an increase in energy costs as sometimes it seems small businesses just can't get a break as their costs just keep increasing every year.

So the problem is both minimum wage earners and companies both continue to face increased costs as everyday inflation in Japan just keeps increasing affecting mostly the middle class and the lower middle class which many part-time workers belong too and then of course increased costs related to energy, materials, and then labor too are causing stress for many if not all small businesses in Japan these days.

In a perfect world, where the costs of energy and material were not significantly increasing small and mid-size companies might less hesitant to agree to the minimum wage increases but as now there is a triple threat for companies with increases in energy, materials and now possible an increase in labor costs there is unfortunately going to be some bankruptcies or some small businesses leaving the market as they just can't handle all of the increase in costs.

Small and mid-size companies in Japan might want to help their part-time or minimum wage workers but they are stressed on all sides and most likely there  is nothing they can do unless they can get some kind of government help with the situation.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20260729/p2g/00m/0bu/025000c

Japan Economy: Ideas Later. Updated July 26, 2026.

Japan economy may surpass 73-month postwar growth record in July

Ideas

The government, as a way to not upset or scare the financial markets, always tries to spin the economic situation as being positive and or a recovering moderately even though there might some sectors not doing so well.

And yes, the Japanese economy might have grown 73 consecutive months but mostly likely the expansion or growth, while positive, might be considered minimal growth at best.

The economic growth, yes positive, as not been enough to really help Japanese households or even some some business such as small and mid-size companies in Japan.

And of course the cost of living continues to be a significant factor in Japan as even again small and mid-size companies continue to struggle costs which seems to be not out of control but rather enough to stress out households and businesses in Japan.

Most likely the Cabinet Office panel, to make sure the financial markets and large companies are placated will say in one way or another that the economy did expand for 73 months, even though again, the expansion can be described as just minimal.

And yes, even though, to be positive, despite significant global situations, the Japanese economy while not that strong has been able to ignore or by-pass many of the disturbances affecting many other countries.

Of course like all leaders of a country, or most anyway, they need and want to say "everyone across Japan can really feel that 'the economy is getting better," when in reality, as with most countries, these days, not everyone is feeling the economy is getting better but they have to say it anyway.

And yes, they want to see everyone is doing better because of the economy is doing better, but unfortunately, in a market economy, because of the increase in inequality, there are some who are doing better and some who are not doing better.

Yes personal consumption or consumer spending might be solid being about half of Japan's GDP, but at the same time, it might not be enough to actually help the expansion be even better, and while wage hikes are good and needed, they need to be continued with even more, with even more, if possible, from small and mid-size companies make up about 70 percent of the workforce is in Japan and not the large name-brand companies which make up maybe 30 percent of the workforce.

Yes government subsidies are needed and important for many Japanese households as their disposable income, ever since the pandemic continues to be eroded.

Capital investment or company spending is very important if the economy is robust and most likely its a good metric that shows companies in Japan are bullish on the economy and are willing to spend significantly as need.

But here is the challenge or maybe the blind spot that is missing here, as back in the late 1990's when the global economy was at its peak and booming no one really saw or thought that there might be a dot.com bust which could be on the horizon related to artificial intelligence and semiconductors.

Its looks like since the so-called US tariff situation has resolved but you can really never know for sure, demand for Japanese cars in Japan has grown again and but at the same time there is still the challenge of inflation in the US that is affecting many families too.

And of course Japanese government officials are going to say its going to take some time, as they don't want to say anything negative as again they don't want to upset to financial markets in Japan or globally, so they are taking a wait and see approach for as long as they can.

And that seems to how Japan does things by taking a lot of time to decide something looking at all the possibilities and even scenarios to a situation while, good or not so good, for most the the time, the US is much different in how they makes decisions.

Yes, that statement, "its hard to be genuinely happy at a time when is uncertain whether inflation-adjusted real wages will keep rising," as here the Japanese government is not only being realistic but at the same time being somewhat in concert with the rest of Japan might everything is not good or feels good even though there might actually be 73 months of economic expansion.

The problem is many household probably haven't felt the economic expansion due to the continued inflation situation in Japan along the idea, again, that up to 70 percent of the Japanese workforce don't work for the large name-brand companies but small and mid-size companies that are unable to match or give the same wage increases that the large companies can give.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20260723/p2g/00m/0bu/018000c

BOJ Position: Updated July 23, 2026.

BOJ to stand pat on rates in July, may raise growth forecast.

Ideas

The Bank of Japan always seems, recently, to say its looking into the situation about the economy, and for the most part, never jumps to quick decision making as increasing the key rate can sometimes have significant side affects to many in the economy.

Yes, there might be strong demand for artificial intelligence products but at the same time, it might not be so strong as it might just be too soon to see whats going on as a month here or there of strong demand doesn't mean it will hold for a year.

And yes, economic growth might finally be trending upward but again an month here there or even a quarter here or there of positive growth doesn't mean growth for a year so more needs to be seen in the coming months.

Again, the BOJ is going to take its time to see just how much the increase in the key rate is affecting business and households and for a very long time, the BOJ's position was the Japanese economy was just to weak to be able to handle a key rate increase so it will be interesting to see just what is stance is now related to the latest rate hike.

And the latest statement that it would allow the bank to asses the impact is maybe communication to the financial markets that its not going to do increase the rate in July as it sometimes, like most central banks, they talk in code to communicate what they might do in the future.

The main targets, usually, that a central bank wants to manage or help control in an economy is inflation and unemployment and as unemployment is not a major problem these days for the BOJ as Japan is supposedly in the midst of a labor shortage but inflation has been a challenge for the Japanese economy almost since the beginning of COVID and to this day inflation is still not under control in Japan, as Japanese households are still experiencing increased prices and now the energy situation could get even worse.

And then there is the weak yen, which can be both a positive and a negative depending if it's an export company or companies in Japan that don't export. For example a weak Japanese yen actually gives more money or yen to Japanese export companies as the price of their products will be higher but at the same time for domestic companies in Japan that don't export, as Japan is a resource-poor country, Japan has to import much of what it needs meaning, due to the weak yen import prices are going to be much higher which potentially can put the entire economy under significant stress.

Its highly unlikely that the Japanese economy is going to overheat unless you use the idea that continued inflation over 3 percent is enough to say that an economy is close to or is overheating but the Japanese economy, for the most part, has been around 3 percent or a little under it for a very long time.

And then there is the idea of unemployment and while Japan does have a significant challenge with unemployment at this time, but usually with unemployment its about an economy that is running at full steam and companies can't find enough workers, but in Japan's case the economy is not running at full steam, as its just beginning to grow after a period of stagnation and even though some reports and articles might suggest the Japanese economy is nearing a record for so many months of economic growth, the growth, while still growth, has been minimal at best, and the Japanese economy might be growing ever so slowly its not growing significantly enough to say the economy is overheating in any sense of the word.

And yes, the BOJ might decide to increase the rate but the increase might be very slight as to not cause a lot of side effects on the economy.

Have a nice day!

 Article source: https://mainichi.jp/english/articles/20260717/p2g/00m/0bu/040000c