Japan Household Spending: Article: Updated March 9, 2024

 

Japan's Jan. household spending down 6.3% as output halt hits autos

Article Source:  https://mainichi.jp/english/articles/20240308/p2g/00m/0bu/008000c

Ideas:

There are always positives and negatives in a market economy, depending on what side of supply and demand you are on.

Usually household spending is considered a positive if spending is good, but a negative if spending is less than expected.

Such as maybe the warm winter weather might have decreased spending on utilities, while a positive for households but maybe a negative for utility companies.

So maybe comes and goes in a market economy and it will always be that with positives  and negatives depending on the situation.

Not sure how Toyota's situation has really affected household spending but maybe they just put them together, unless there was less buying of small cars.

The Japanese economy should be able to handle a decrease in production and shipments related to the Daihatsu situation and it should not be factor in less household spending.

Yes, the Toyota group is significant in the Japanese economy, but it should not affect all things in the Japanese economy.

Unless I am reading completely wrong, it appears the authors are trying to link the Toyota group situation with less household spending in the Japanese economy.

But there are probably many reasons for less household spending such as inflation and consumer fatigue related to the inflation situation.

Again, there are always positives and negatives related to spending in a market economy, depending on which side of supply or demand you are on.

There is the possibility, using the business cycle example, there are always going to be ups and downs in an economy, and maybe now, Japan is in down period of less household and consumer spending, mostly due to the inflation situation.

Not discounting the Toyota group situation, spending on cars/autos is a major purchase and maybe at this time, households just don't want to commit that much to buying a new, and maybe, they are waiting for the April wage increases to get a new car.

As inflation continues in Japan, households/consumers are looking for bargains and sales and substitute items that are less expensive.

Most likely domestic travel in Japan, among Japanese is less than wanted to expected due to higher airline ticket prices and hotel prices, which have also increased since the pandemic has ended.

Of course the weak yen is a deterrent for Japanese travelers who want to travel overseas, but its an incentive for international travelers who want to travel to Japan.

Japan has got to very careful about education spending, as for example spending in South Korea is out of control, and it might be one reason why South Korea has one of the lowest birthrates in the world, as would-be families don't want children because of the high cost of after school programs to keep up with the Kims in society.

Consumer spending or private consumption is maybe 50 percent of Japan's GDP, but it is much lower than the US or maybe even the EU.

For it to significantly affect GDP growth it needs to get in the 60 percent range but the way the Japanese economy is structured, at the present time, its not going to happen.

For example, more women needs to be in leadership positions with more women having a chance to advance their careers.

A new report just suggested that the workplace for women, is near the bottom of OECD advanced countries which should be an embarrassment for Japan, but probably not as Japan, is still focused on men and not all in the economy.

Have a nice day and be safe! 

Japan Real Wages Fall: Updated April 30, 2024.

 

Japan real wages fall for 2nd straight year amid rising inflation

Article Source:  https://mainichi.jp/english/articles/20240206/p2g/00m/0bu/015000c

Ideas:

Real wages are wages with inflation and basically the wage increases in April of 2023, wasn't enough to cover the continuous increases in inflation each month.

Wage increases usually only happens in April, the beginning of the new business fiscal year in Japan, but inflation is a monthly situation and there is not just one time inflation increases but basically every month.

The 2014 consumption tax or sales tax situation was a situation in Japan, that saw consumer spending decrease significantly in April of 2014, but consumer spending did rebound as consumers and households got used to the sales tax increase.

Household spending or consumer spending is always a challenge for the Japanese economy, as maybe Japanese consumers/households are not the like the free-spending US consumers, as maybe they are more inclined to save instead of spend.

Nominal wage increases, including overtime pay might sound good, but it also includes inflation increases, which gives it an inflated picture of what is really going on.

Its quite possible, because of energy costs and raw material cost increases maybe small and midsize companies just don't have room in the profit margins to offer wage increases similar to what large companies can offer.

Most likely, like most economies, most workers don't work for the large name-brand companies but instead work for the millions of small and midsize companies. Large companies, especially the name-brand companies, these days, get all the news but, again, most workers in every economy don't work for large companies.

If small and midsize companies begin to see enough large companies increasing wages, and then if they begin to hear that some small and midsize companies too, are increasing wages, it become a multiplier effect situation and snow-ball throughout the rest of the Japanese economy.

The reason is Japan is facing a labor shortage and companies, large, midsize, and small need to increase wages to get the best talent possible. If they don't increase wages as an incentive, they are not going to get anyone to work for their company.

Of course, unfortunately, the regional areas, with smaller population bases are going to suffer the most, as many young workers, educated and less-educated don't want to work in regional areas but instead want to work in Tokyo, Osaka, Kyoto, Nagoya, and so on.

December alone, because of the double holiday period in Japan, meaning the Christmas period and the end of the year period, might have seen prices increases during those times, and at as the same, real wages decreased due to price increases.

Some might say a real percent drop of 2.6 percent is not much, but at the same time its more of an average and maybe most likely for some households consumer spending decreased a lot more than 2.6 percent and the upper-income group were probably around the 2.6 percent average, and the lower-income group probably decreased spending even more than 2.6 percent.

Not to get too much on a rant here, but its unfortunate that Japanese students have to go to after-school programs for extra study just to get into the so-called prestigious elementary, middle, and high school, and of course universities.

Its even worse in South Korea and China, where students spend up to midnight taking extra study classes.

Again, maybe most households spent less than the average mentioned here, or maybe many lower-income households spent much less and of course maybe the upper-income groups spend much more.

Its sad that parents have to spend on educational expenses just to keep up with the so-called whomever in society. Think of the stress children/students have to go through just to get into a so-called prestigious school, just to make them or their parents feel good.

Food for the average household might be about 30 percent of household spending, but for the lower-income groups its probably much more than 30 percent, as they have to use more of their limited income on food.

And the same for the upper-income groups that maybe use less than 20 percent of their income on food.

Maybe many household goods are not an everyday every week or even an every month purchase, and as they see the prices increase they might decide to just wait.

Here in South Korea there are still some people wearing masks but its much less than a year ago, but everyone wears one at a hospital or a pharmacy.

Its natural that people want to get out and about instead of just staying at home like during the pandemic.

But its interesting that household spending decreased in December, as it might have been related to price increases in December and consumers/households didn't want to spend that much during the holiday period or the New Year period.

Private consumption, consumer spending, or household spending is always a major challenge for the Bank of Japan and the Japanese economy, as it seems Japanese consumer just don't spend as much as US consumers.

For example December is a major shopping and spending month in the US, and many companies finally get into the black for the first time all year.

But maybe Japanese households or consumers, despite all of the Christmas sales, advertisements and so on in Japan, don't just spend like, again, US consumers.

Have a nice day and be safe!

Japan Economic View: Updated Dec. 31, 2023.

 

Japan views economy on moderate recovery path, warns of Mideast risks

Article Source: https://mainichi.jp/english/articles/20231030/p2g/00m/0bu/045000c

Ideas:

"Recovering at a moderate pace" is a polite expression and or it is what it is, meaning the Japanese economy is not yet where it should be but headed in the right direction.

Anytime there are global risks such as the Ukraine situation and now the Mideast situation, there are only gong to be global risks that might disrupt supply chains, export shipments, oil/energy shipments and so on..

What the Japanese government doesn't want to do it give a report that might disrupt or shock the financial and stock markets. So they always tend to keep the reports somewhat positive. 

Companies might view business conditions as "recovering moderately, and that, again, is a  positive view and it could be somewhat different depending on company to company.

Public investment is never a liner or straight line of investment, as there are going to be months of a lot of investment and month of less investment depending on the situation.

Again, a "moderate recovery" might be true for some or many, but the Japanese economy, like any economy, has many sectors and maybe not all companies and sectors are going to improve or grow exactly the same.

Monetary tightening in the US for example, at this time, seems to have taken a pause, as the US economy and inflation in particular seems to be decreasing and the US Federal Reserve, the US central bank, has not increase the rate recently, and for 2024 they have suggested, as the US economy continues to improve, there might be three rate decreases.

Inflation or price increases, continue to cause stress for Japanese households and companies, with maybe no end in sight as some suggest 2024 could be more of the same.

The Middle East situation, unfortunately, is an ongoing political risk, that never seems to resolve itself. 

As far a fluctuations in the financial markets are concerned, there are positives and negatives to fluctuation depending on the market and the intensity of the fluctuations.

The Japanese yen at 150 is a very weak yen, but at the same time, there are positives and negatives to a weak yen.

For Japanese export companies a weak yen helps Japanese companies can get more profits for their Japanese products. But at the same time, if Japanese products become too expensive, compared to South Korean products or Chinese products, there is the chance that they could lose their competitive edge.

Also, as the Japanese yen is weak, it a strong incentive for foreign tourists to go to Japan and they can spend more as their purchasing power increases significantly. 

But for Japanese importers, the weak yen increases import prices significantly which also means maybe households have to pay more as importers and wholesalers, and companies  pass-on their increase costs to the next in the supply chain.

Private consumption, for consumer spending, or household spending, however you want to describe is maybe 50 percent of Japan's GDP and or a little more, compared to the US where consumer spending is maybe 60 percent or more.  But, overall, consumer spending has not reached the level that the Bank of Japan or the Japanese government would like to see, as Japanese consumers, for the most part, are more savers than spenders.

Business investment is never a monthly situation as its usually more of quarterly situation as to when companies decide to invest.

Japanese exports are a major economic driver, meaning it helps the Japanese economy grow significantly, even though Japanese exports might only be 20 percent of Japan's GDP.

Consumer spending might be related, still, to latent spending, meaning Japanese consumers during the pandemic reduced their spending or delayed their spending until the pandemic ended. 

And for the most part, inflation might not be that much of a stress for some in the Japanese economy, as maybe they might not feel the affects of inflation and or they don't notice the increase in prices of what they buy each day, each week or each month.

The final economic package, is never what was intended initially, as different factions in the Japanese diet, or parliament, will change the what was intended, to meet the demands of their constituents and or group interests.

For example, the tax cut and cash handout, as intended initially probably will be much less as the factions work on it.

The global economy, at this time has many challenges, from the Ukraine/Russia situation, the Middle East situation, and closer to Japan, the Chinese economy is going through some major transformations or changes along with some significant domestic challenges.

The US economy, as this time, appears to be headed for a "soft landing," meaning its not going to head into a recession, and its moving out of its inflation situation.

Have a nice day and be safe!