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Japan's economy shrinks as consumers hold back on spending

27 Comments
By YURI KAGEYAMA

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“The yen’s depreciation gives tourists better value for money, making Japan more attractive as a destination,” said Hiroyuki Ueno, senior economist at SuMi Trust.

Must be nice to get paid the big yen to state platitudes while this has actually no relevance to the lives of working Japanese.

Japan's economy shrinks as consumers hold back on spending

Japan Inc. in collusion with the LDP has choked out the Japanese consumer economy.

Socialism for the rich Abenomics was never going to trickle down, unlike wage increases and income support that would have been put back into the economy almost immediately.

But that was never the point, the exaggeration of inequality is a feature, not a bug for the oligarchs.

0 ( +19 / -19 )

@dagon well said !

-6 ( +11 / -17 )

Prices rising. Wages stuck in the 80s. Politicians getting paid in 2 or 3 months the equivalent of an average persons wage + mail and travel money, the recipe for disaster has no sugar for tax payers.

0 ( +13 / -13 )

Some analysts say the Japanese economy will likely gradually recover, although still at risk from what China's pandemic measures, as well as larger geopolitical tensions like U.S.-China relations.

Please, just who are these "some analysts?" Historically Japanese consumers do not spend money on large ticket items, or luxury goods, when the economic future is uncertain. It's been that way for at least a generation now.

Lack of real wage increases, increases across the board in cost of living expenses, and a host of other cost increases keeps the money in the mattresses and not in the economy.

I for one would love to see a true, comprehensive, survey, of more than just a 1,000 or 2,000 people, done by a private, reputable entity, that asks the average Japanese person what THEY think, and not what the government wants everyone to think.

5 ( +13 / -8 )

China’s COVID-19 restrictions are also being closely watched because of their great impact on Japan and the Asian region. Although there have been some easing of restrictions, fears are growing about a next wave of infections bringing back lockdowns and other restrictions.

Eventually China will have to come into the year 2022, even if it takes another year or two, but for now it has become obvious that instead of acting like countries that have controlled the pandemic without requiring draconic measures that affect the economy (like Sweden) the priority for the CCP is to use the pandemic as an excuse to control the population by weaponizing the restrictions. So more than a wave of infections it maybe popular discontent the one that could originate a new round of lockdowns.

4 ( +7 / -3 )

If everything is costing more and employers aren't going to raise salaries, all you can do is cut back on expenditures.

11 ( +11 / -0 )

How can you raise salaries when there is less money coming in? Taxes are way too high. Consumption tax is crippling. Cutting out some of the dead wood in government offices and cutting down politicians' ridiculously high salaries and bonuses would reduce the burden. Heavily tax those who live on unearned income, investment, buying and selling stocks and shares. They produce nothing. Spend money on things that MAKE money. Make it more possible for people to produce. Reward production!

8 ( +9 / -1 )

Inflation at 3% but real wage growth since 1972 has been only 3.2% and fell 1.3% this summer. The consumers saw how incompetent the government was during the peak of the pandemic so they're holding onto their money for the next crisis. The aging population living on fixed income pension doesn't benefit at all from the tourist trade, nor do the young couples starting a family when their income is being siphoned off by taxes. Diet sessions are spent on cleaning up Abe and the LDP's mess at the expense of actual legislative work so yeah, it's no wonder that the economy is shrinking. The irony is that people will vote LDP again in the next election.

0 ( +5 / -5 )

If you didn't have to wear a mask everyday you could be spending or saving that money instead...

-9 ( +2 / -11 )

Inflation in Japan at about 3% is moderate compared to the U.S. and some other nations. "

Sure, if you conveniently exclude food and gas from the figures as J-govt has been doing its all nice and dandy. 3% ? The govt oyajis should go to any supermarket and compare prices with what they were a year ago. Then tell Taro and Keiko that inflation is only 3%.

-6 ( +6 / -12 )

The solution is very easy, clear and obvious, but for whatever reasons not even considered. Don’t waste anymore all the megatons of printed money for a few already rich people or for burning it in the forex market, no, take it for lifting off the money helicopters and spread it everywhere among the people while you still can. That’s the Marshal plan creating a new economy, a new bubble that works, giving trust and future to all population groups, so that also the population grows again and innovations that will sell globally are sprouting everywhere. Relying only on some post corona tourism? Please, don’t fool yourself, the tourists come and go and their countries are financially stricken too, so nothing to expect that has any reliable substance in the longer run. But the population is there, everyday and in need for a future they can rely on by a new attempt of strong efforts.

1 ( +1 / -0 )

Agreed @Yubaru

For years (decades) during the deflation times, the line of "analysis" from the economists was "Deflation is bad because consumers put off purchases in hopes that prices go down. So people spend less."

Now, with inflation instead, they say the same thing.

1 ( +3 / -2 )

Btw, as for consumers holding back spending because of inflation....Who on here remembers the nonsense that J-govt, Bank of Japan and its economic experts were spouting for decades that consumers were not spending during the deflation years because they " were holding back in hopes of prices falling further ".

-2 ( +6 / -8 )

People aren't "holding back" on spending! They're cancelling spending outright! This government is clueless.

1 ( +12 / -11 )

ok its simple.people are getting less and need spend more for daily necessities.say rent/mortgage,than food,electricity,water,gas.most necessary costs all went up.than need to think with leftover in pocket-if have any-what to do.or to keep in bank/with almost zero interest/or buy something extra,say clothes etc.

so here we are LDP crooks.this is "secret" of "holding back" with spending.many tax payers have suffered last 3 years and you did nothing to help them.one cash handover and some silly family supprts for tiny fraction of population did not change whole situation at all.average Tarosan-if still lucky and have job-is getting same money as before or even less/because of covid,this and that-company can make tons of excuses/-and still need to pay more for life than before.and yes-cant afford better life even try his best.no Hawaii trips or wekend shopping in Korea-it became old history for him already.

this is japanese "demokrashi" when top crooks from LDP printing money hard,helping to this and that country,working hard on nice japanese image abroad,buying outdated US weapons at incredible high prices-and at home own nation having hard time.no investment in new japanese population/schooling,family support,lowering or abolishing VAT for basic necessities/,no new schools,hospitals.nothing.

but yes-crooks pockets are endless and their greed is hard to imagine.

-6 ( +8 / -14 )

There is years of bottomless QE, and Japan's economy still finds a way to keep contracting. One wonders where all that money went and how BOJ will ever shrink its balance sheet.

-4 ( +2 / -6 )

I thought the lifting of the COVID urgings have resulted in an increase of spending. Wasn't just there an article stating this last week?

-2 ( +1 / -3 )

Some analysts say the Japanese economy will likely gradually recover

And many more say otherwise...

But there were also signs of hope. Tourists from abroad have returned, starting from last month after more than two years of tight border limits.

The tourists that have returned are not the ones that spend any significant amount of money in Japan. Buying figures in Akiba doesn't count. The big spenders, the Chinese, are not back.

2 ( +4 / -2 )

Oh! So we are not in 1980s. Weak Yen didn't help to boost GDP! Will Kuroda san learn ?

Well at-least the wages are still in 1980s.

Inflation is also rivaling 1980s levels.

And so is Kuroda san.

-4 ( +5 / -9 )

Yen will probably return to depreciation soon.

360 and beyond is the future. By that time, Japan is probably poorer than any ASEAN state, while it's not a member of G7 or G20 anymore.

-16 ( +1 / -17 )

Cool down a bit, dear @Eastman, it’s useless to complain or provide solutions. But anyway, also your bashing full of anger is having quite some complexity and has of course a true kernel.

-6 ( +0 / -6 )

Consulted my ouiji board as it’s proven to be more reliable then the Government and it tells me in the crapper, waiting for a flush.

-4 ( +2 / -6 )

@Sven

"Helicopter money" is the solution to inflation, economic contraction, and currency devaluation?

I'm sorry, that's sarcasm...right?!

1 ( +2 / -1 )

here is years of bottomless QE, and Japan's economy still finds a way to keep contracting. 

The population is contracting, and so the economy is contracting. It's hardly a catastrophe.

A better measure of economic health is socio-economic levels, where Japan continues to score high. The housing and infrastructure have improved remarkedly since I first came here. There is also a better selection of food in the supermarkets, people are among the world's healthiest, while the air is cleaner and the streets a lot tidier.

If you want to see a real "contraction," then ditch the QE -- and try austerity. LOL.

1 ( +4 / -3 )

The Japanese just have to accept that they are getting poorer and pride takes a hit….

-3 ( +1 / -4 )

Says the article,

consumption declined amid rising prices.

As others noted, it doesn’t take a genius to figure that rising prices in Japan leads to less consumption.

Of course, the centra planners know that (they see it each time they raised prices by hiking consumption tax rates), but they wanted inflation anyway… because inflation is the only new tax they can impose on us and keep spending money they don’t have to buy votes and power.

-2 ( +0 / -2 )

Helicopter money" is the solution to inflation, economic contraction, and currency devaluation? I'm sorry, that's sarcasm...right?!

@Seven

Yes, it is, no sarcasm. Let’s assume, you are given a big truck full of newly printed money. You don’t care then about some higher energy or supermarket prices, you can afford the best available courses on artificial intelligence and create a start-up and employ new staff, and of course however less value your currency has now, you can even buy your first bottle of expensive Frech wine. Additionally you can attract or find a nice woman and have a house and kids which will help against aging society. Now , that’s only an example, of course. But now think what you can do without that helicopter money and a part time job at a gas stand at minimum wages. Right, you still have the inflation, an economy and job that doesn’t feed you and the much printed money lands in a few riches hands and brings your few remaining currency under pressure anyway.

0 ( +0 / -0 )

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