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Consumer prices, household spending fall in March

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I guess it is counter act by consumers on the counter act of Govt. Eventually tax rise by 4% did not help, so will extra 3%? OR who knows the figures are plain lies. Huh?

2 ( +2 / -0 )

Household spending falls because no one has any money, because companies are not investing the free money they get from the BOJ into more spending and/or money in the pockets of their employees.

What is BOJ going to do to change rates that they haven't already? The issue is not that the BOJ can't or won't give out free money, it's that it stays with companies who are too scared to use it.

2 ( +3 / -1 )

Can someone who understands economics please explain to me why falling prices is a bad thing for consumers?

3 ( +3 / -0 )

Can someone who understands economics please explain to me why falling prices is a bad thing for consumers?

The theory is that if people think that they can get something cheaper by waiting a while for the prices to drop, they will wait for the prices to drop, thereby stifling purchases.

Personally I think that's a load of hooey, not least because if that were true, no one would ever buy anything since they would constantly be waiting for it to get cheaper.

0 ( +5 / -5 )

Anything new here?

It should be called "Abe-fail-nomics"!

And this will definitely not be the end!

2 ( +2 / -0 )

Until salaries are increased, I don't really see how this is unexpected.

4 ( +5 / -1 )

BOJ should deposit money to each person's account directly.

The cash made available to banks and companies are not passing to the public, which are the intended recipients. Just remit it directly.

it should also be a decent size of payment so that people's mortgage and child raising expenses are eased. That will free up cash for other consumption.

Time for unorthodox measurements.

1 ( +2 / -1 )

Can someone who understands economics please explain to me why falling prices is a bad thing for consumers?

The theory is that if people think that they can get something cheaper by waiting a while for the prices to drop, they will wait for the prices to drop, thereby stifling purchases.

Personally I think that's a load of hooey, not least because if that were true, no one would ever buy anything since they would constantly be waiting for it to get cheaper.

I have always wondered about this, too. Mr. Holly constantly complains about electronics prices being more expensive here than in the U.S. We wait for prices to go down here, but as they never do, we wait for our annual overseas trip to buy electronics. Add another 3% to everything and soon we'll be buying our toilet paper abroad, too. Thanks, Abe.

2 ( +3 / -1 )

It should come as no surprise that consumer spending drops in March every year. It's the time of year when companies renew contracts and students graduate university. Most households tighten up their belts in March due to the uncertainty of what will happen in April. It's also the start of the new financial year, which also slows spending as companies and households reevaluate their finances for the next financial year.

4 ( +4 / -0 )

Price drop, consumers don't buy, as if we can wait a week of not eating or being naked. Economic models are economist's fart, why do they even award noble prices to these people and not for Mathematics which IMHO is a much more noble topic than an economist's "prediction".

2 ( +3 / -1 )

how many tens of thousands of employed consumers retire each month in Japan then start getting a fraction of their prior income in social security (or no income until 65 if they retire at 60). this deflation is unstoppable.

1 ( +2 / -1 )

"The world’s third-largest economy has largely defied more than three years of Bank of Japan and government remedies aimed at boosting prices as well as broader activity."

Well, then, you would think maybe they would stop doing the same, desperate moves and making the situation WORSE. Everyone said the tax increase to 8% was a bad idea -- the government said it was necessary to improve the economy. The economy has gotten worse and now they say they need to increase to 10% to get people spending and address the fallout, which is ridiculous. It's unbelievable.

I love how the media is now pointing out the desperate acts without trying to hide it, and mocking the term 'Abenomics' as it should be mocked.

3 ( +4 / -1 )

Falling prices dont just affect consumer spending, they also affect investment decisions by big companies (who are currently sitting on piles of cash). If they see that the price they can get for their goods is going down and likely to continue doing so (as they do right now), they wont build new factories, open new stores, buy new machinery, hire new workers,give current workers raises or do any of the other things they might do which would help the real economy.

The problem is that the government, through its influence on the Central Bank, is as the article notes just basically tinkering with interest rates and buying paper in an unsustainable manner to try and reverse the trend. This is ineffective and, more importantly, companies know it is ineffective so it does nothing to encourage them to actually invest their money. And these are the only policy responses this government is currently capable of/interested in pursuing.

I can`t say with confidence that the opposition parties have anything better to offer, but at this point almost anything other than more of the same would be preferable.

2 ( +2 / -0 )

To get the majority of people to spend you have to lift the minimum wage, by 7% each year for 20 years. WE try economically theories for the last 20 years and it has only made Japan worst off. It is time to put money in the hands which will spend and that is the Minimum wage earner. It just make sense!!!

1 ( +2 / -1 )

Instead of Abenomics, would this be a better solution: a basic income for all people in Japan?

http://goo.gl/KSQ7BL

Or am I just drinking the socialist kool-aid?

1 ( +1 / -0 )

Everyone said the tax increase to 8% was a bad idea -- the government said it was necessary to improve the economy.

The government never said the tax hike was intended to improve the economy.

There was cross-party agreement that consumption tax hikes were necessary as a baby step towards plugging the 40 trillion yen budget deficit, and reducing the pace at which further debt is piled on the 1,050 trillion yen debt mountain, which will be impossible to keep under control given Japan's shrinking work force unless steps are taken to address it.

The government was right about that much, but Abe has failed miserably to implement policy changes to boost Japan's long term economic prospects.

0 ( +1 / -1 )

Just do a search on Amazon for something and then search for the same thing on Amazon JP.

Sometimes the difference will astound you.

A product I wanted was over three times more expensive on the JP site.

It's just way too expensive now. And with the upcoming tax hike it is going to get much worse.

2 ( +2 / -0 )

The world’s third-largest economy has largely defied more than three years of Bank of Japan and government remedies aimed at boosting prices

That right there says it. Those idiots at the BOJ are as smart as a rock. Boosting prices is not a good thing unless you boost the middle class's income- otherwise, you get less purchasing power for the people. Its simple, but nobody ever accused anyone in the the LDP of being anything but stupid.

The rate move—which aims to encourage lending by essentially charging banks for storing some excess reserves in BOJ vaults —was widely panned as a desperate move

It is.

was widely panned as a desperate move to save Prime Minister Shinzo Abe’s growth drive, dubbed Abenomics

Save Abenomics?? Are you kidding me?? Ahonomics has been dead since he raised the sales tax. AND he said he'll still raise it AGAIN in spite of nearly all international economists warning against it even BEFORE the earthquake.

Japan’s deadly earthquake disaster this month sparked factory shutdowns that threaten to slam the brakes on growth

What really worries me here is if we have a major earthquake in Tokyo. That will plunge the economy into an abyss from which we may not recover from.

0 ( +1 / -1 )

Food is expensive. Ever since they rose the tax food companies also put their prices up to match the extra taxes they have to pay to put out product. I would say since the tax hike went up my family has been paying close to 10 to 15 percent more on food and daily items. That's enough to take a good chunk out of luxury goods, eating out and so on for most families living in Japan. It's not rocket science.

1 ( +2 / -1 )

because companies are not investing the free money they get from the BOJ into more spending and/or money in the >>pockets of their employees.

It is not as simple as that and most of the companies do not get the free money you are talking about, they can get potential loan after being accepted into a govt plan and usually then, a side bank will advance the payment to them, however, all investment made with that money will be reviewed and eventually covered by the govt plan (but not 100% sure) so there is a potential risk. Finally conditions are getting stricter and stricter, this year, some loans directly prohibited the money to be invested into the companies's employees, only money was allowed to be spent on equipment or services.

1 ( +1 / -0 )

No competition (pay a bottle of water in combini some 80 yens wherever you go...), no transfer of money from company to the employees (management team gets fatter and fatter), no strike nor demo from people to ask economic reforms, no change in the political vote, demography (when you have bought enough, you stop buying anything special at 65), the fact that retired people don't travel much (partly because transportation costs are state controlled again), etc and etc. Situation is getting closer to edge of cliff. I forgot: limited health system compare to most western European ones (I have no fear to get injured since 100% costs would be taken care of with good doctors, same for pills even if it's 10000 euros a day!), so young and old do not take any risk, is overcautious all the time.

It is falling and no measure at all are taken (no yens to help families...I even got reduced family subsidies myself last year lol) Bad day dreaming often for the work part timer in particular.

0 ( +0 / -0 )

Maybe this would be the "golden solution"?

A bank in Germany announced negative-interest-rates for loans.

So, you will actually get money, if you borrow.

Perhaps someone should tell Mr. Kuroda and buddies??

0 ( +0 / -0 )

The government keeps 'urging' companies to raise wages but it seems like it'll never happen. Honestly though, I make a good wage now. Unfortunately, I have to spend almost 40% of it on taxes (of one kind or another) and health care because I'm part of the kokumin hoken scheme. The government can't force companies to raise wages but they can force them to enrol their employees into shakai hoken. If I were enrolled in shakai hoken a good part of my salary would be freed up to spend on other things. This might be a good start to get the economy rolling again rather then trying to rely on the goodwill of companies to raise wages.

0 ( +1 / -1 )

As long as the government and banks favor big business and the wealthy, nothing will change... Those changes will only occur when the anger and frustration of the masses reach critical mass and the people begin to riot. The upcoming tax hike will only push this inevitability closer as more and more households slip into poverty.

0 ( +1 / -1 )

Household spending falls because no one has any money, because companies are not investing the free money they get from the BOJ into more spending and/or money in the pockets of their employees.

Nonsense, do not spread lies. The companies do not get any "free money" from the BOJ. The money is loaned out at interest, not given away for free. The companies have issued debt to borrow the money, and they have invested the money in the stock market, waiting for Abe's "third arrow". This had the effect of doubling the value of the stock market, even in the face of nearly zero improvement in sales or growth. Most of the earnings made by companies have been from stock gains in the resulting bull market. But since it appears that the "third arrow" never existed, and that there will be no fiscal reform or deregulation, the companies who invested all the borrowed BOJ money are now stuck with their pants down, and have lost half of their gains over the past few months. If the market continues to fall, they will lose all their gains, and be stuck with the debt they incurred to buy stocks in the first place.

1 ( +2 / -1 )

Because... Keynesian economics does not work any more than Socialism. Look at Venezuela now. Paradise.

-1 ( +2 / -3 )

The price of oil is low and the yen high! It would be hard for prices not to drop, don't you think?

0 ( +0 / -0 )

The price of oil is low and the yen high! It would be hard for prices not to drop, don't you think?

The population is falling by hundreds of thousands per year, so there are hundreds of thousands fewer consumers in the economy. The decrease in demand for goods results in deflation.

2 ( +2 / -0 )

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