The Next Tax Hike?

Prime Minister seems to indicates he plans to go ahead with the next consumer tax hike, from 8% to 10%. Consumer tax hikes are/were never popular in any country, but especially in Japan, as consumer spending is always the major area of concern for the Japanese government, due to the rising ageing society. In  2014, when the tax hike was from 5% to 8%, consumer spending plunged as expected in Q2. In Q1 of that year consumer spending increased, of course, as consumers spent ahead of the future tax hike, which is consistent with supply/demand in economics. Then in Q3 consumer spending seemed to move back to normal, as Japanese consumers, as everywhere, got used to the higher prices. It remains to be seen if the same spending pattern or behavior will again result in the quarter before a large increase, then in the tax hike quarter a decrease, and then the next quarter back to normal. The government has been laying out plans for exemptions for some products and services mainly in the retail or food service industries that would be exempt from the tax hike. But the details are not clear yet.


© 2019 Tom Metts,  all rights reserved

Japan Economy and the Weather?

I watch Japanese TV on my tablet every morning. It seems, at times, that half the news is about the weather every five or 10 minutes. There is no doubt that Japan is very vulnerable to extreme changes in weather, as Japan, for the most part, still have a rather significant, but decreasing agricultural industry, so the weather plays a huge part of what happens there. Typhoons, monsoons, mudslides, earthquakes,  and of course the never forgotten, March 11, 2011 earthquake and tsunami is never far from peoples' minds. The weather can have and other factors, natural disasters,  can have huge affects on the economy as in the Osaka area last year and the Sapporo area last year too. The western side of Japan always seems to get huge snow storms along with the affects of irregular monsoons or rain storms this summer so far and this past spring. All things equal it seems Japan gets more than its share of bad weather every year, that potentially can have huge affects on the economy.



© 2019 Tom Metts,  all rights reserved

Japan Economy and the Convenience Stores (Conbini)

Japan has a unique business model that have developed over the past 10 or so years related to the convenience store, called conbini in Japan. The conbini now is a one-stop shopping place that is become an essential part of Japan society and the economy. Go into a modern and new conbini, 7-11, Lawson, Mini-stop, Family Mart etc. and you can probably find any of your daily needs, including fresh food. I often visit a Japan conbini just to see all the fresh food on display that you might get on the go. I have never seen it anywhere else in the world. Also at the conbini you can do a number of things such as banking services, print services, even delivery services from any number of places such as Japan Amazon, which will deliver near to where you live.
Japan conbini stores, like many businesses in Japan are experiencing labor shortages and Japanese young people don't want to work in the conbini and or don't want to work in the night shift 12 to 7 for example. As such companies such as 7-11 are now experimenting with closing during those hours. The Japan conbini was/is known as the 24 hour store whenever you needed something. But because of the labor shortages the 24 hour openings might be gone in the future. Anytime I go into a Japanese conbini I now see international students working at the store, instead of young Japanese students.

© 2019 Tom Metts,  all rights reserved

Trade War?

Not sure what is really going on. I prefer not to mix economics, business, and politics. But it seems to be more and more these days. No one wins in a trade war and possibly the idea of a Korea/Japan trade war seems to be progressing. Japanese companies are going to suffer and Korean companies are going to suffer, if they aren't already from the China/US trade war. No one wins. There has got to be better ways to solve problems or challenges.

It doesn't seem to be the best strategy for either country to impose sanctions or whatever as both countries, more than ever, need each other to overcome the obstacles related to the China/US trade war. Both economies are not at their best right now and seem to be trending down, so the idea of political tactics or whatever you want to call them might not be the best idea now.

Too many other companies, such as Apple and HP, non Korean companies, are going to be affected by the Japanese strategy. It doesn't seem to be a good idea.

Both countries can do better!


© 2019 Tom Metts,  all rights reserved

Slight Increase in Inflation

Also on Monday there were reports of sligh inflation growth in the Japanese economy for the first time in many years. While not much its showing signs of improvement.

 

http://blogs.wsj.com/japanrealtime/2015/02/16/growth-data-show-signal-of-inflation-for-first-time-in-17-years/


http://www.esri.cao.go.jp/jp/sna/data/data_list/sokuhou/files/2014/qe144/pdf/gaiyou1441.pdf

Slight Recovery

The latest economic news about the Japanese economy showed modest but positive growth of 2.2 percent for the 4th quarter of 2014. Economic forecasters were expecting 3.6 percent. It must be remembered, except for the US, most economies are not near growth projections. Even China has not shown strong growth, compared to it past growth record. But for Japan, after two consecutive negative growth periods, has shown again, that its not dead.

Except for the U.S. economy of late, most economies have not been able to show sustained economic growth. Consumer demand probably remains fragile in Japan along with business investment. But even 2.2 percent is still huge for an economy the size of Japans. Take that 2.2 percent against any of the individual EU countries and I would be sure they would be happy for that kind of growth.


© 2015 Tom Metts,  all rights reserved

Japan Trip

First day on trip in Yokohama. I will be watching closely the shopping habits of Japanese consumers. At a Starbucks now. It seems less crowded than before, even for a weekday. However this location sometimes has less customers than other places. A lot of people walking around but do not see a lot carrying bags. There is a much larger shopping area nearby that might be more busy.

 

After spending 10 days in Japan, mostly watching and observing the economy, around Tokyo and Yokohama, I would like to say Japan is not as bad off as news reports tend to think. Japan is still a large economy. Third or fourth depending on stats. What is usually lost on news reports is how much economic activity there is in this economy. Even when its not a full potential, which is hasn't been for a while, it is still bigger than all but a few in the world.

 

An interesting observation was the number of Chinese tourists I saw while I was there. Everyday, no matter where I was, there were large groups of Chinese. In the hotels, in McDonalds, yes I went there in Japan, just to visit. In the large discount electronic stores, in the major shopping districts, large groups of Chinese everywhere spending money.

 

Again, the Japanese economy might not be running at full potential, like everyone wants, but it is still a huge economic engine.

 

Since the trip there has been a lot of news about the Japan economy. I will be commenting on some of that news later.


© 2015 Tom Metts,  all rights reserved