business

Japan's economy stalls as incomes, spending languish

32 Comments
By ELAINE KURTENBACH

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32 Comments
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Where's that arrow?

2 ( +4 / -2 )

Japan’s vital signs remained weak in July, as wages fell further and household spending dropped, signaling continued weakness in the world’s third-largest economy.

No -- can't be. Abenomics was going to solve all this. At least that's what he and the Finance Minister keep telling the world at all the economic conferences they go to. Sarcasm aside, did anyone really expect anything different? There is an expression in English -- "You can put lipstick on a pig, but it is still a pig" -- which is completely appropriate here. All Abe and his finance minister did was artificially prop up the economy for a few quarters with massive spending and liberal BOJ measures. But since they have done nothing to address Japan's numerous structural issues, it had no lasting effect.

10 ( +15 / -5 )

Where's that arrow?

In Abe's foot

11 ( +13 / -2 )

cue Gomer Pile's voice: "surprise surprise."

Seriously, did ANYONE REALLY believe that any of these tried and failed methods would do anything. OF COURSE spending is at an all time low. How many people have full time jobs? How many companies have made downsized and made their workers do Service Zangyo? People ain't got no money and everything is expensive.

5 ( +6 / -1 )

You want consumers to spent more? Its so easy, INCREASE the salaries.

Motivate the companies to increase the salaries by cutting corporate taxes IF and only if they provenly increase the salaries. Giving more money to the rich people by just helping the companies it wont make people spent more money.

By increasing the salaries in low and middle class people will spent more and most probably they will spent a little bit more than the increase they received.

People just want to be safe, no one is saving money because of deflation. Who really cares about buying something 0.5-1% cheaper after one year. But I do care if everything costs 3% more and actually it went up 5% or more in some cases.

2 ( +5 / -3 )

Good to see that hefty corporate tax hike went into salaries as expected... Oh wait, companies here usually get out of taying tax so most haven't seen any change at all.

2 ( +3 / -1 )

while abe is not my cup of tea, too many commentators, paid and unpaid, can't wait for him to fail and will jump upon any data to validate their i-told-you-so mentality. the effects of most gov't stimulus measures take anywhere from one to two years to take hold. but myopic voters, and commentators, demand immediate gratification. unfortunately, japan does not have a plan B. so we should all be rooting for him to succeed on this front.

-5 ( +2 / -7 )

Don't you know the third arrow? It is obviously a nice war with China to rev up the economy.

-2 ( +4 / -6 )

Japanese people are traditionally loath to spend money when the economy starts turning south and ONLY purchase large ticket items out of necessity rather than luxury.

Abe-nutics was doomed to failure the minute it was announced, only problem is that Abe is the last one it seems to know it.

5 ( +6 / -1 )

Where's that arrow?

that 3rd arrow for structural reform? Not need anymore...why? As it is apparent from these latest data, economic 'structure' itself is destroyed by previous two arrows.

4 ( +5 / -1 )

To put it in a nut-shell: Didn't we know all that already?

1 ( +2 / -1 )

Consumers would spend more if salaries were increased as was promised many times. Still waiting!

Looks like that's never going to happen. Question is... where is that extra money going?

3 ( +5 / -2 )

Increasing sales tax negates any beneficial effects of inflation. Better to let inflation do its work alone: after 10 years of 4% inflation the national debt principal will be reduced by one third [adjusted by inflation, and assuming no new principal :) ]

0 ( +1 / -1 )

Let the people keep more of their money.

1 ( +2 / -1 )

"for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Winston Churchill

5 ( +7 / -2 )

Let the people keep more of their money.

? article says real incomes fell 6.2% in July also unemployment rate edged higher to 3.8%

1 ( +2 / -1 )

First arrow, here's money, banzai! Second arrow, here's more money, banzai!!!! Third arrow, women needs to work and treated as equal, salaries need to be raised, companies need to take more risks ... banza ... muri muri muri ... maa, kawanakute ii, konomama de ii.
1 ( +4 / -3 )

"Let the people keep more of their money"

What! The government knows how to spend money better than the people!

1 ( +1 / -0 )

The Western optimism in me wanted to believe Japan would change, start to accept the world or that it least it was on the horizon When you step outside, however, you experience the same ole disappointments; ingrained xenophobia, inflexibility, etc. I have concluded that Japan fundamentally cannot change, even with Abenomics or any other scheme. Many thought, after the tsunami, that foriegn companies would arrive in the droves to bid on the reconstruction. It was of course not to be, with the head creep from Tepco telling us that foriengers would scare off the elderly citizens of Fukushima. The head creep was only expressing what the majority felt. Japan has problems at its core, and until they are addressed, there wont be any change. Only the Japanese themselves , long term residents or students of Japan know these core problems and they are difficult to express. Its much easier to appeal to Japans martial spirit than upset the Wa.

5 ( +8 / -3 )

So, salaries and spending have decreased after giving corporations huge tax cuts with no enforcing regulations to ensure corporate tax cuts were passed on to workers? And, unemployment has increased after changing the regulations to make it easier for corporations to fire people? Bwahahaha! What huge surprise that is, NOT!

Abenomics 3 arrow plan = FAIL!

1 ( +2 / -1 )

Looks like they wikll have to crank theb yen priniting presses even harder. Only way out if for yen to lose another 10 to 15 % of its value in the short term and then another 20% by end 2016.

-1 ( +0 / -1 )

"Softness in the labor market would counter any moves toward higher wages that might help spur more consumer demand."

Which means the "labor shortage" is a good thing. Yep, just I said earlier, although I collected tones of "bad" ratings at the time.

Clearly, the income tax hike has destroyed the nascent progress seen until the end of 2013.,..also just as I predicted.

-3 ( +1 / -4 )

The government plans extra stimulus spending to counter the tax hike’s lingering effects.

Um, why not just save money by not raising taxes and sinking the economy in the first place?

4 ( +4 / -0 )

I think Abe shot himself in the butt with the third arrow.

0 ( +2 / -2 )

This is why we need peer-to-peer digital money like bitcoin and NEM, so that governments don't have the ability to mismanage all of our lives.

0 ( +2 / -2 )

Get ready to welcome recession number 2. All we get for adding trillions of yen to the debt for "stimulus" spending are fat contracts for construction companies, and fat retirements for bureaucrats and politicians.

I can't wait to see what the politicians have up their sleeves after the economy collapses again, it certainly won't be the phantom "third arrow". They can't borrow, print, or spend anymore than they already have. I am glad I get paid in dollars.

2 ( +3 / -1 )

"I can't wait to see what the politicians have up their sleeves after the economy collapses again,"

The last time the economy collapsed, in 1991, wasn't due to politicians. It was due to the asset bubble, a direct product of rampant unchecked capitalism seeking short term profit. The players were the banks, real estate agencies, and other private businesses. The govt wasn't a player.

If you're worried about the future, then keep your eye on the financial sector. This is where the real danger lies, although politicians like Abe who are lapdogs of the business sector are also a threat to our prosperity.

0 ( +0 / -0 )

If the ingrained interests wanted to improve the economy here it would be so simple! Japan is a land of sheep mated with head-in-the -sand-ostriches......

0 ( +1 / -1 )

Currency crisis looming on the horizon Captain Abe, what is your order, sir?

-1 ( +0 / -1 )

I am glad I get paid in dollars.

I don't get paid in dollars but I have converted all my yen holdings into dollars and swiss francs. I imagine all foreigners in Japan have done and are doing the same. Only total simpletons would hold on to the yen now.

-3 ( +1 / -4 )

@Umbrella, looking into Sterling / Yen for long FTX. Bought in 124, now 174. Previously have bought in at 158 and cashed in at 243. Big swings for the bling.

0 ( +0 / -0 )

If PM Abe wants to "goad" consumers and businesses into spending, and investing more, cut taxes. Allow people to keep more of their hard-earned salaries, and Japan will have see consumers spending more money.

Abenomics, and the sales tax hike are geared more towards slowing the economy down. Taxation on incomes, and businesses remain high, and excessive. Sales taxes reduce the buying power of ever stagnant incomes.

What Abe, and many Japanese politicians don't realize is that economic growth can't be government driven in a free market economy. The best government can do is to get out of working people's pockets, and off companies' backs. Let the marketplace do the heavy lifting in the economy.

Japan, like most developed countries, has "tax fatigue". Higher taxes, or more taxes, aren't going to bring about the recovery the country needs. Nor will they rein in the debt in the long run (especially if spending continues to run amok).

Give working people a break, a real break, on taxes, cut business taxes down to %15, and try to foster a larger entrepreneurial class. This is what the Japanese government needs to do.

1 ( +1 / -0 )

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