Japan Household Spending: Updated Dec. 13, 2024.

 

Japan's household spending in October falls 1.3% amid rising prices

Article Source:  Article source deleted by mistake.

Ideas:
The Japanese economy can't grow much if Japanese household spending or consumer spending doesn't pick up, but that has always been a challenge in Japan.

Seasonal factors play a role in spending too, as the warmer weather might have delayed the buying of late fall or winter clothes in Japan.

Japanese wages, in April only increased but the challenge is inflation increasing almost every month so the the benefits from wage growth doesn't last very long.

Spending on food, for most households of two or more people, and with normal incomes is probably not that much, but for the low income groups,  30 percent of their income for food might be a little too much.

Consumer spending, for most, will look for substitutes, if the foods they usually like become to expensive or they become too elastic, meaning the price increase became too much and again, they look for substitutes such as chicken instead of pork or beef.

Perhaps some of the ingredients used in chocolate might have increased too much as chocolate producers had to pass-on the price increase onto the retailers or the consumers.

Again, seasonal weather, such as the record high temperatures that lasted into September and October had an affect on late fall and early winter clothes buying.

Most likely, as the price of materials needed for housing renovations increase, households either delayed renovations or decided not to do them at all, until maybe prices decrease.

As inflation continues in Japan, Japanese families might have decided to not sent their children to after school programs, as inflation has reduce their disposable income levels

Consumer spending in Japan has never been a strong indicator as in the US, as consumers in the US are more spenders while consumers in Japan are more savers.

Consumer spending might be half of Japan's gross domestic product, but it might not be enough to increase economic growth in Japan.

Real wages are wages adjusted for inflation and as inflation continues in Japan, the real value of wages in Japan is not very good as inflation seems to outpace wage growth.

Nominal wages are wages not adjusted for inflation but real wages are adjusted for inflation, which means a wage earners purchasing power could be reduced if inflation increases.

An increase of 0.9 percent might not even feel or be noticeable to wage earners as again inflation might actually reduce what could have been more than 0.9 percent increase.

Purchasing power is the real indicator for wage earners or anyone in an economy, as it indicates how much a consumer can spend in relation to inflation.

It seems consumer prices in Japan have been increasing ever since the pandemic and while they might be slowing from 2.9 percent to 2.6 percent, the average consumer might not feel any difference between 2.9 and 2.6.

Wage earners can get two bonuses per year, one in the spring/summer and one in late fall or early winter, which might make-up for the lower salaries in Japan compared to the US.

And yes, real wages are dependent on price increases or decreases, and if the trend continues, they might be decreasing some, but will consumers feel anything different.

This might seem like the situation in Japan is beginning to improve but Japan has a long way to go to get back to the advanced economy level as Japan has slipped a lot and is now more like a developing economy, without the economic growth.

But its a good start if these numbers continue to improve and maybe Japan can see some real economic growth which it hasn't seen since the asset-bubble crash of 1989.

Have a nice day!

Japan Firms and Economy Optimism: Updated August 16, 2024

 

Japan firms less optimistic about economy amid weak yen, inflation

Article Source:  https://mainichi.jp/english/articles/20240811/p2g/00m/0bu/023000c

Ideas:
Even at 70 percent only of companies expecting the Japanese economy to expand, that is still a good number.

The key of course will be consumer spending and whether wage increases will take an effect in the Japanese economy this summer or in the fall.

Inflation and the weak yen, is still going to affect the Japanese economy, as consumer may feel both related to the increased prices related to imports.

Inflation has been affecting the Japanese economy, significantly ever since the pandemic, and it hasn't really come down that much. It is trending down, but not by that much yet.

Japanese companies have some good reasons to be cautious, as the Japanese economy hasn't done much in the last decade.

Consumer spending may or may not improve this summer, as the yet again, the summer heat wave might deter consumer spending, as a Japanese article recently stated when the temperature gets above 35 C, consumer spending might be less than normal.

Capital spending is another animal altogether, but the principle is the same, if companies feel good about the economy, that might spend or they might wait, just like consumers.

Spending by foreign visitors is an important economic activity but it should not be considered an economic driver of the Japanese economy, as there needs to be even more foreign tourist spending in Japan.

But the challenge is, maybe now some might think there are now too many tourists in Japan, but if you compare the number of tourists in Japan with France, Japan still has a long way to go to reach the level of tourists that travel and spend in France.

Consumer spending in Japan is always a challenge and consumer spending is only maybe 50 percent of Japan's GDP, while in the US its over 60 percent. That 10 percent difference might just be the difference in the Japanese economy growing or being flat or stagnant, and if it decreases that makes it even more difficult for the Japanese economy to grow.

An increase in prices, depending on the product or service can affect many consumers or just a few consumers, depending on consumer sentiment, or feeling about price increases.

The weak Japanese yen is both positive and negative depending on whether you are a Japanese exporter or a Japanese importer.

The weak Japanese yen is a positive for Japanese exporters, as it they can get more for their products overseas, but it a negative for Japanese importers, as it increases the price of products brought into Japan.

Until recently, many Japanese companies were reluctant to increase prices and they basically just absorbed their material costs and other costs, and allowed their profit margins to get thinner and thinner.

But those days seem a long time ago, as its a different age in Japan now, as Japanese companies, like western companies, have no problems increase their prices, even for the final retail customer.

The focus now, with Japanese companies, seems to be satisfying the shareholder and not so much customers or even company workers these days.

The Prime Minister of Japan and the Japanese Diet can only do so much, and it has be society related to the low birth rate and the aging population situation, along with companies policies that help working women, and also continuing to allow older workers to continue working and not force them to retire.

Its natural and normal for Japanese companies to focus on Japan, but there might be some benefits to moving operations to another country such as Vietnam, which might be considered the new China in terms of economic growth.

And of course some companies want to be in the US with its huge economy and huge consumer base which might be good for some Japanese companies.

Not wanting to be in China, at this time, is again normal, as the Chinese economy seems to be going through a rather long transition period and who knows exactly when it going to get back to some kind of normal.

Just in the last few days, while there were concerns of a possible recession in the US, new information came out that consumer spending in the US economy increased in July and the recession fears have been reduced greatly.

Stock markets and or financial markets are always jittery about every little thing, and must be taken literally every time there is change here or there in the stock markets or financial markets, and the big picture or the long term is what is most important.

The Chinese economy, might not be back to normal at this time, but if Japanese companies can see the big picture that China as a huge consumer base, like the US, it might be good to remain in China, and stick it out until the Chinese economy eventually gets back to some kind of normal.

Have a nice day and be safe!

Japan Household Spending: Updated July 7, 2024.

 

Japan's household spending in May down 1.8% on year

Article Source:  https://mainichi.jp/english/articles/20240705/p2g/00m/0bu/007000c

Ideas:

Japan household spending might continue to decrease this summer despite the wage increases in April, as maybe 70 percent of the Japanese workforce, work for small and midsize companies and they probably didn't get a large enough wage increase to feel good about spending in the Japanese economy.

While inflation continues on Japan, wage earners, for all companies only get a wage increase once a year in April while, again, inflation increases seem to be monthly these days.

The Japanese economy, while stagnant lately, is still a very stable economy, as there are usually no real significant shocks except for continued inflation and the weak Japanese yen.

Yes, its still not clear if wages have outpaced inflation, as its hard to see any real consumer spending in the Japanese economy, yet, related to the April wage increases.

Japanese wage earners maybe are still very weary about the state of inflation, and might be waiting for some real significant decreases in inflation before they begin to spend again.

Maybe the summer Obon, or summer vacation period in Japan, there might be some significant consumer spending, but if the summer weather is very hot like last summer that might deter many from going out and spending.

Japanese households might have decreased spending on food and vegetables, as the prices of vegetables has increased significantly during the past year. 

Household spending, or consumer spending, might be half of Japanese GDP, but its not near its potential as inflation constrains consumers spending in the Japanese economy, and for the most part, Japanese are more savers than spenders, and anything, such as inflation might keep them from the normal spending they might do.

But Japan, as with any society is made up of individuals and each person or household has their own wants and desires and they might spend as they see the need to spend on whatever.

The Japanese yen being very weak compared to the Euro or US dollar, might deter Japanese travelers from traveling overseas at this time, while the weak Japanese yen is a positive for foreign tourists traveling to Japan.

And yes, remote work, for the most part, seems to have ended in Japan, but there might be some companies still allowing or encouraging their employees with hybrid work, some in the office and some at home.

Unfortunately, as the pandemic has ended, more and more of the subsidies that the Japanese government gave out are now expiring, and the Japanese government is trying to get back to some kind of normal or new normal after the pandemic.

The Japanese economy has a long way to go to back to any significant economic growth, and there are still many variables blocking normal economic growth.

The Japanese economy might get back to 1 percent economic growth, and if it does, that would be a good start to getting back to normal.

But the problem, recently with the Japanese economy, it gets one or two quarters of positive growth, at maybe 0.5 percent, and then one or two quarters of negative growth, and that seems to be the trend of the Japanese economy these days, as it seems it can never get any real momentum going related to economic growth.

Have a nice day and be safe!

Japanese Company: 2024 Economy: Updated March 20, 2024.

 

Over 70% of firms expect Japan economy to keep growing in 2024

Article Source:  https://mainichi.jp/english/articles/20240103/p2g/00m/0bu/010000c

Ideas:

There has been periods of optimism before but many times the Japanese economy disappoints the optimists unfortunately, 

But this time maybe, finally, the optimists are going to prevail. There is something about self-fulling prophecy related to an economy. For example, if enough companies and consumers remain optimistic and they continue spend and continue to drive demand, than an economy will shows signs of improvement.

However, the opposite can happen if many companies are pessimistic and consumers remain pessimistic and don't spend or invest an economy can decrease too.

And also, if consumers, Japanese consumers keep hearing and seeing good economic projections that the economy is going to get better, they might begin to feel it or perceive and begin to spend as if the economy is good, and the same with companies and capital investments.

An economy is like a living organism, in that it feeds off of good ideas but decreases if it hears and see too many bad ideas.

Th fact that TSMC is building new facilities in Japan is a very good idea, that they think the Japanese economy in the future is going to increase.

And the more news, like this, that companies are increasing capital investment in Japan, is again a good sign for Japanese society, that the economy is going to get better in the future.

The Japanese economy, of course is an advanced economy, and as such most advanced economies rarely grow faster than 3 percent if even that. For Japan 1 percent growth would be about normal.

Consumer spending in Japan has always been a major challenge, as Japanese consumers just don't spend like those in the west, as Japanese have mostly been savers while those in the west have mostly been spenders.

Japan just revised its quarter 4 stats and moved the Japanese economy out of a recession, with the latest data, after saying the Japanese economy has moved back into a recession.

Wage increases will be important for the Japanese economy to completely move out of the deflation stage and stagnation state too.

Again wage increases will be important to help stop deflation and stagnation in the Japanese economy, but all companies, large midsize and small need to increase wage increases and not just large companies, as maybe 70 percent of wage earners in Japan don't work for large companies.

The Japanese domestic economy is struggling with the weak Japanese yen, as import prices continue to increase or are at a level that many importers are struggling, while exporters enjoy record profits from the weak Japanese yen.

The Bank of Japan will need to balance the needs of importers, the domestic economy, and the needs of exporters, and at the same time, be concerned that if they increase the key rate too much and too fast in the future, if could affect international tourists who travel to Japan because of the weak yen.

International tourists spend a lot in Japan and help increase the Japanese economy. As such the Bank of Japan, has to decide what is a desirable range for the US dollar/yen to keep international tourists coming to Japan and at the same time, make sure the domestic economy and Japanese importers are not too stressed about import prices.

Its a very strategic balancing act that the Bank of Japan has to figure out in the future. as too strong or too weak affects different groups differently in the Japanese economy.

All of this is not going to be fixed with one change in the Bank of Japan's policy as it might take a long time, the most of 2024, to get the mix right for both the domestic economy, Japanese exporters, and international tourists too.

A lot has changed since late November or December as the Japanese economy has gone through many changes and will continue to go through many changes.

What companies say in one month could easily be changed in the next month or coming months as economic conditions change too.

Have a nice day and be safe!

Average Christmas Gift Budget Declines: Updated Feb. 13, 2024

 

Avg. budget for kids' Christmas gifts in Japan declines for 4th year in row

Article Source:https://mainichi.jp/english/articles/20231202/p2a/00m/0bu/008000c

Article:

TOKYO -- High prices are putting a winter chill on spending on Christmas gifts for children in Japan, as the average budget for packages under the tree for the wee ones has declined for the fourth consecutive year to 7,718 yen (about $52), down 243 yen (approx. $1.70) from 2022, according to a survey by major toy maker Bandai Co.

Bandai has run the survey every year since 1995. This year's edition was conducted via the internet in early November, and responses were received from 600 people in their 20s to 50s with children aged between 3 and 12.

When asked about their budget for Christmas presents, the most common response was "between 5,000 yen and no more than 6,000 yen (roughly $34 to $41)" at 43.8%, followed by "between 10,000 yen and no more than 20,000 yen (about $68 to $136)" at 30.8%, "under 5,000 yen" at 10.9%, "between 6,000 yen and no more than 10,000 yen" at 9.5%, and "20,000 yen or more" at 4.8%.

Ideas:

For the most part, probably Japanese parents don't spend as much on children as in the US. But of course its very much individual and also it depends on a families level of income. No doubt the continued inflation in Japan has been a factor on all spending.

And the age of children might have something to do with how a family spends, as maybe the younger children will get more Xmas gifts compared to older children.

But Japan is not a Xmas oriented country, even though, commercially, its very big related to the time of year and decorations and so on.

Japan doesn't celebrate Xmas the same way as the west does as in Japan Dec. 25 is not a holiday.

Article:

However, those responding that there was "no change" or an "increase" from last year's budget accounted for approximately 94% of the total. As for the reason for the decrease in the average amount, a company representative suggested that "the decrease in the number of respondents with a budget of 20,000 yen or more may have had an impact."

Last year, 5.7% of the respondents had a budget of 20,000 yen or more, and the average sum in this highest tier was 34,000 yen (roughly $231). On the other hand, this year, not only did the proportion of respondents with a budget of 20,000 yen or more decrease, but the average amount in this bracket also slid to 29,310 yen (about $200). This suggests that the decline in top-tier spending may have pushed down the overall average.

The most common reason for increasing the children's gift budget was "age-appropriate change" at 50.0%, while that for cutting spending was "change in the cost of gifts requested by children," also at 50.0%. Some 34.4% of respondents also said that "other expenses have increased due to higher prices."

Ideas:

As usual, everything is based on families and no family is the same, even in Japan, as maybe some families want to spend more and some families want to spend. Again, maybe the age of the children has something to do with it.

For example, maybe children in the 5 to 10 age group expect more Xmas gifts while those in the 12 to 18 might expect less Xmas gifts.

As to why top-tier spending might be less, as there could be many factors such as the age of the children, the asking for certain gifts, and or the parents just don't want to spend as much this year.

Of course, besides a decline in top-tier spending, maybe the lower-income groups might have reduced their spending some this year too.

Article:

Meanwhile, the gifts most desired by children was the same as the previous year: gaming software at 19.0%, followed by gaming consoles at 7.0% and character cosplay toys at 4.8%. Electronic devices such as smartphones, tablets and computers came in fourth at 3.8%.

Electronic devices made it into the top five for the first time this year, having previously reached a high of No. 9 in 2018. Requests were particularly high among 9- to 12-year-olds. This is likely due to the introduction of devices such as tablets as learning tools in elementary school classrooms, and respondent comments included, "I want to use (a device) at home, too," and, "I want to watch videos on a large screen."

Ideas:

Not to say too much about this idea, but in South Korea, many elementary age children have smartphones and so do middle schoolers, and of course high schoolers too.

Maybe a smartphone can be considered an electronic device along with tablet and notebook computers, which are now used a lot classrooms.

And the same time, if a student, elementary age, sees or knows their friends or classmates have a smartphone or tablet or notebook computer, they will probably ask their parents for the same kind of device.

Its a major problem in South Korea, and probably in Japan too these days, It also puts a huge financial strain on parents having to keep up with the other parents, especially when the parents don't have to money to buy such things.

Have a nice day and be safe!