business

Japan factory output, consumer spending weak in April

17 Comments

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

©2019 GPlusMedia Inc.

17 Comments
Login to comment

We all know the drill; consumer spending, especially for durable goods, rises just before the new tax hike, and falls off the cliff after the tax hike. Will it push Japan into recession? Likely, considering how weak the economy is already.

3 ( +4 / -1 )

These are the numbers published by the government. I wonder what the real numbers are?

8 ( +9 / -1 )

Japan has been in a perpetual recession since 1991......

5 ( +6 / -1 )

And May is even worse.

0 ( +2 / -2 )

March - April in Japan is like December - January in the West.

Just as consumers splurge out for Xmas and New Year sales, the Japanese splurge out on moving into new apartments and fitting them out.

Very very bad spending figures so far this year and can only get worse with the passing months.

4 ( +5 / -1 )

The world’s third-largest economy has been stuck in the doldrums despite massive monetary easing aimed at vanquishing deflation

You can't vanquish deflation that way. Deflation is occuring because people are not spending. They are not spending money for 2 reasons: 1. they don't have money 2. they are too busy working to spend it.

Getting out of deflation is easy: 1. raise the minimum wage to 1500 yen an hour. 2. Start to implement measures that will ensure that people will work an average of 40 hours a week- no more.

You will then see a populace that 1. has money to spend and 2. has time to spend it.

other than that, nothing will get Japan out of deflation. nothing.

4 ( +6 / -2 )

@Aly Rustom, is it really that simple? You present a very appealing arguement, but surely there has to be more to it than that! I'm no 'Eckonomist but there must be more to solving the problem than just giving folks more time & money

2 ( +2 / -0 )

Taking food out of the equation is the joke of deflation. Of course crap you don't need to survive is going to deflate if basics like food is inflating.

6 ( +7 / -1 )

Aly!

You can't vanquish deflation that way. Deflation is occuring because people are not spending. They are not spending money for 2 reasons: 1. they don't have money 2. they are too busy working to spend it.

You missed the most important one. 3. They do not need to buy things they have no use for. Why buy something if you do not need it?

2 ( +3 / -1 )

and volatile fresh foods, it rose 0.7%.

What the heck is a volatile fresh food?

1 ( +1 / -0 )

ClippetyClopMay

Well, it is more complicated, but it would be difficult to write a long answer. This is just a very abridged version of it.

Hi MsDelicious!

Well, I would agree with you there, although I do think that state of the average household today, I don't really see people buying a whole lot of anything, be it things they need or not. I see everyone poorer today than before Abe took office.

1 ( +2 / -1 )

Blind to the multiple factors that govern the well being of any economy , not to mention the co-variance of those variables, create those "experts" relishing in selective bias

1 ( +1 / -0 )

Minimalist millennials aren't buying houses left by the baby-boomer hoarders who are dying by the thousands, stop fighting already, just let the economy correct itself, what went up, must come down.

1 ( +1 / -0 )

Getting out of deflation is easy:

You have things backwards here, it is not wages which are too low, but goods that are priced too high. Japanese spend two-to-three times as much for food as Americans or Europeans, due to high tariffs on imported food products. Other goods are also tariffed, driving up prices, and then there is the old evil of price fixing, which is common throughout the country, and also keeps prices higher than they would otherwise be.

As for working long hours, why do you think that happens? How much work do you think a Japanese does in a typical 10 or 12 hour day? Less than what is done in 8 hours in America or Europe. You forget that Japanese companies do not use performance based promotion or hiring systems, so there is no incentive for workers in Japan to work hard, or work at all. The best worker in a Japanese company will be paid no more than the worst worker, so why should a good worker bother?

Wages are stagnant because companies are heavily overstaffed with unproductive workers who do little more than keep their seats warm during their long workdays.

The primary cause of deflation whenever it occurs is high prices. When prices are too high, people buy less. To encourage people to buy, prices decrease. Eventually prices reach the level people are willing to pay, and deflation stops.

Unfortunately, with 100 trillion yen in debt, the government cannot tolerate any amount of deflation. 1% of deflation increases the government's debt servicing costs by billions. The government is trying to create inflation in every way possible, except the correct way. If tariffs were abolished, price fixing abolished, and seniority-based promotion systems changed to performance based systems, prices would fall, productivity would increase, consumption would increase, and inflation would occur. The only problem with doing the right thing as that it costs nothing, and the government is not interested in any solution which does not allow them to spend trillions of our yen, and direct that spending to their friends and supporters.

3 ( +6 / -3 )

it is not wages which are too low, but goods that are priced too high

Japan's minimum wage is abismally low in comparison to other developed countries..have a look https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

The primary cause of deflation whenever it occurs is high prices. When prices are too high, people buy less. To encourage people to buy, prices decrease. Eventually prices reach the level people are willing to pay, and deflation stops.

Exactly. so we should raise the minimum wage.

Wages are stagnant because companies are heavily overstaffed with unproductive workers who do little more than keep their seats warm during their long workdays. If tariffs were abolished, price fixing abolished, and seniority-based promotion systems changed to performance based systems, prices would fall, productivity would increase, consumption would increase, and inflation would occur.

no agrument there.

0 ( +1 / -1 )

Exactly. so we should raise the minimum wage.

Wrong, on several levels. First, the market in Japan is heavily manipulated, and cost-heavy. The majority of Japanese businesses don't earn much in the way of profit, in fact, 70% are "loss producing", meaning they earn no profit. Unprofitable businesses cannot afford to raise wages. In mom-and-pop businesses, often the owners don't make much more than their employees do. Most people in Japan are employed by small businesses, not big companies. Even the larger companies pay little; executive in Japanese companies earn the same or even less than professional-level people in America or Europe. Go outside Tokyo and visit the countless smaller cities in the country, look at all the closed and boarded up stores in their shopping districts. You don't even have to go outside Tokyo, many shopping districts in the city are half or more vacant.

Next, raising the minimum wage never makes logical sense, because in the short term, raising the wage results in the cutting of hours or staff. The long term effects are an increase in the cost of goods, which negates the value of the wage increase. You can say that other countries have higher minimum wages, but wage rates are relative, and the quality of life minimum wage workers enjoy remains constant, regardless of changes in the wage. More money per hour, minus less hours equals no change. A 10% increase in pay resulting in an eventual 10% increase in the cost of living equals no change.

Lastly, low minimum wages are a great encouragement for people to learn a trade or get an education which will provide them with a better income. I have worked for minimum wage, and as a person with no skills and little education at the time, my labor had very little value. But rather than ask my employer to pay me more, I went to university, and gained the knowledge necessary to receive a higher salary. Paying low-skilled people high salaries discourages these people from ever trying to educate and improve themselves, and we end up with a society with too many such people. In a fiercely competitive world, this is economic suicide. It is bad for the low-skilled workers, because when their employers are put out of business, or their national economy collapses (pay attention, Japan), what are they going to do then?

-2 ( +1 / -3 )

Wrong, on several levels

First of all, allow me the same courtesy I do you. I happen do disagree with ALOT of what you say, but I will not say you are wrong- only that I think differently.

The majority of Japanese businesses don't earn much in the way of profit, in fact, 70% are "loss producing", meaning they earn no profit.

That, is just impossible to believe. First of all, where did you get that stat? I would like to look at it. It is impossible to believe that the world's third economy's majority of businesses are losing money. The nation itself would look worse than Greece today if that were true. Please find me a source that I can check. Until that, I'm sorry, I just can't believe that. Its too incredible of a statement to make, but I promise to look at any source you quote.

Even the larger companies pay little; executive in Japanese companies earn the same or even less than professional-level people in America or Europe

No they don't. Japanese execs do VERY well. Its just the wealth income gap is not as obscene as that in the West. The US is certainly NOT the benchmark to go by. Yes, the JP execs are not as rich as the ones in the US..nor should they be- ANYWHERE.

Go outside Tokyo and visit the countless smaller cities in the country, look at all the closed and boarded up stores in their shopping districts

I don't live in Tokyo so I know what you are trying to say, but the closed and boarded up stores have nothing to do with salaries; its the declining population coupled with centralization of everything into Tokyo. NOTHING to do with the minimum wage.

Next, raising the minimum wage never makes logical sense, because in the short term, raising the wage results in the cutting of hours or staff.

There is no proof that raising wages means cutting hours. That's just speculation. When you raise wages across the board you get a public with greater purchasing power. This leads to more business hense more hours and also more hiring.

Lastly, low minimum wages are a great encouragement for people to learn a trade or get an education which will provide them with a better income.

That is a republican argument which has been disproven. When you can't make enough to support your family because your wages are too low you are not going to have time to get a degree. You will get a second job to make ends meet. But lets for the sake of argument assume its true. What if EVERYONE got an education? Then what? How many doctors, lawyers, and bankers do we need? Can we actually survive in a society where NOBODY does blue collar work anymore?

I have worked for minimum wage, and as a person with no skills and little education at the time, my labor had very little value

There is no such thing. All labor has value. Without construction workers, where would your execs live and work? Without waitresses and fast food cooks, where would you go for a quick lunch during your workbreak? The checker at the supermarket counter- without her/him would you buy your groceries? You may think little of these people who have no education and skills, but they are providing us with much needed goods and services without which, life would not be fun for the rich either.

Paying low-skilled people high salaries discourages these people from ever trying to educate and improve themselves, and we end up with a society with too many such people.

You speak of these people with a tone approaching contempt. Why? These people are every bit important to the economy as your educated people. Bear in mind that many people with degrees are also still working those jobs.

REgardless, ANYONE working a 40 hour week SHOULD be able to provide for their family. That's not the case here in Japan. We need to raise wages and provide more social support for the middle class. That's where your strength comes from- not the rich.

0 ( +1 / -1 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites