Japan's frugal millennials a bad omen for economy

Despite such unprecedented measures, private consumption - roughly 60 percent of Japan’s gross domestic product - remains stubbornly low.

From just whose opinion are you stating this from? The smart consumer holds their cash when times are tight, and Japanese are well known for saving.

It's not being stubborn, more like prudent.

When people FINALLY wake up someday, if they wake up, they will realize that the policies of the LDP and the current zoo keeper as well, have dragged individual spending down into the gutter.

Minimizing spending and still leading a fulfilling life

Well, they have the first part right - perhaps they have exposed the lie that happiness comes from consumption, and good for them - but the second part still seems to need more thought.

Yubaru. Good comment. Exactly what I was thinking. Just rather poorly written I think. As for living a more simple life, they will probably be better off for it in terms of happiness.

Maybe they don't like brands anymore, but most of my uni students still list "shopping" as their favourite hobby.

It could also be that consumers have finally had enough of the BS that manufacturers and retailers have been pushing all these years and just don't fall for it. In Japan, the US, Canada, the UK, Spain and France, I see more of a discontent with having to fill one's life with 'stuff' just to be able to enjoy life. Some things you need while others would be nice BUT nobody needs ALL the crap that it seems 'they' want us to buy all the time.

Frugality used to be considered a trait - when people were valued for their true worth, not simply by their selfies and how much they consume.

We should learn from the past and stop following this consumption orientated trainwreck.

Why buy things you do not need?

Also, what is with all the consultant jobs? What do they consult?

I actually don't think it's a 'millennials' only thing, maybe more of a mid 2010s thing perhaps. People young and old are perhaps finally coming to terms with the fact that one can live a fulfilling yet less materialistic life.

Many young and not so young people have been priced out of their homes and own city/country (that's very much the case in sydney oz) and have a simple choice to make: spend your life working always harder to pay off your (overpriced home) loan or live differently perhaps will less perks (materialistic ones at least) and own less. I prefer option 2 and like the fact some millennials do too.

“Wearing expensive brand-name clothing like Prada head-to-toe is uncool" is the comment that stands out to me. It's not as if they don't have it or they can't afford it, it's what is cool to the western civilization now is outdated to them. I'm glad I read this article just to see the word "cospa" because it's something I myself understand. Buying every new iPhone that comes out is idiotic to me, my phone does what I need it to do and until it completely malfunctions or shatters into 100 pieces I'm not buying a new one. Some people have to understand Japan isn't a place that needs to keep up with trends.

This article continues to lament the fact that young people aren't spending. yet the article itself addresses the reason here:

Young people are reluctant to spend because of stagnant wages and a lack of stable jobs. Nearly 30% of contract workers aged 25-34 said last year that they settled on temporary jobs because they couldn’t find permanent employment, according to a government survey.

There you have it. Stagnant wages and no stable jobs. Fix that and people will spend.

Abe has been campaigning to correct the wage disparity between regular salaried workers and contract workers - who make up almost 40% of the labor force - that companies rely on to cut costs, hoping this would help boost spending.

That muppet has done very little of that. Since he took power, his administration has put the economy on a back burner and instead focused on restarting nukes, reinterpreting the constitution, eroding civil liberties with the state secrets law, and flooding the economy with QE that threatens to break the middle class.

They don’t need cars and shun brand-name clothing, once coveted by their parents during the booming 1980s.

Let's talk about cars. To have a car you will need 300,000 to go to driving school. Then you need to buy the car and pay for parking and insurance. THEN on top of THAT you will need to pay about 100,000 every 2 years for shaken or car registration renewal (and that's IF your car has NO defects- if it does expect MORE MONEY to fly out of your pocket) and of course you have the road tax.

The Japanese gov. seems hell bent on over taxing the populace and squeezing them for every last penny they have while at the same time NOT providing them with proper jobs and safety nets AND printing money so that the companies can export overseas while prices here rise.

And the stupid gov wants to the people to spend?? Spend WHAT??? You've fleeced the people, and now you want to add insult to injury by complaining that the populace doesn't spend? If I were Abe, I would just be glad that the people aren't doing to me what the people of SK are doing to Park Geun-hye.

Total opposite of the bubble era of the late 80s. I wasn't quite 10 years old, but even I could understand the consumer mentality. Buy, Buy, Buy!!! Luxury goods all the way!! Now that is "not cool". Abe and crew don't have a clue. It's the economy, stupid.

Well, I guess the death of mindless consumerism is a nice silver lining for a terrible economy.

Recently I am seeing old cheapo, 2-floor apartment buildings - the kind that are usually rented out to broke students, broke pensioners and winos - being rented as retail spaces. They are filled with tiny cafes, shops and restaurants. It means an eyesore becomes a charming little warren of shops. And the rent is dirt cheap.

Meanwhile, the high-rent shops in the established districts are struggling to get tenants, or are filled with tenants who are struggling to sell overpriced branded junk.

Between less money to spend and the convenience of shopping online, we are going to see some huge changes in the cityscapes.

One point missing is, many of these millennials are already living off the savings of their parents and are just waiting for their parents and grandparents to die to receive their inheritance. These parasites stand out very clearly in the tertiary education level. They do next to nothing at school, have all the brand name accessories and the manga-style hair cut and that's just the boys.

Several labor "reforms" are responsible for today's more prudent spending. When job guarantees are gone and people are forced on 1-year contracts, they hold back on serious spending. Here, "reform" is the problem, not the solution.

Anyway, Japan has had decent growth...on a per capita basis. Looking strictly at aggregate output is not a good way to determine economic health for mature economies in this day and age. Living standards in japan have improved greatly since I've been here.

A 1000yen watch bought in Harajuku and a 100.000yen watch bought in Ginza tell the same hours. The difference is that the expensive one is usually tackier and less functional

I applaud the young Japanese for shunning the status symbols of their elders. People who still wear Vuitton and Gucci are usually older people still trying to hold onto some sort of their self-worth.

Are young people less materialistic and is this being driven by worsening prospects for them? Yes and yes.

However, I think the big picture in Japan is better conveyed by the word "kuudouka" or "hollowing out". The middle class is being destroyed, leaving a slightly larger number of very high earners and a far larger number of people pretty much just getting by with little money or job security. For retail, this means that you either want to be dirt cheap (100 yen shop, Uniqlo type fast fashion, APA hotel etc.), affordable feel-good treat (premium beer, Starbucks etc.), or sophisticated high-end (Michelin starred restaurants, Hoshino Resort, all the high end outdoor brands (Snow Peak, Norrona, Arcteryx, etc.), traditional high end fashion brands, high-end imported cars). The middle is just shrinking and shrinking. While it is good for many people to be less materialistic, it also means young Japanese have less money and motivation to get out and have positive experiences. This can be anything, getting out to socialize, or having different hobbies, or going overseas and learning about the world. In my opinion, this lessens them as people. More Japanese should study overseas, not fewer.

I think there is a much stronger "we're all in this together" type social contract in Japan than in the West, so that increased inequality is more dangerous for this society.

JeffLee

Living standards in japan have improved greatly since I've been here

When have you been here since, JeffLee? 1945?

"A 1000yen watch bought in Harajuku and a 100.000yen watch bought in Ginza tell the same hours. The difference is that the expensive one is usually tackier and less functional"

Maybe so but I think the point is young people would like to be in the position to choose whether to buy a ¥1000 watch or a ¥100,000 watch.

Jeff Lee's comment about 1-year contracts and no job stability pretty much nails it. The temp staff take home somewhere in the region of ¥130,000 a month at my place of work. I don't get the impression from their self-deprecating comments that these people would be shopping exclusively at the likes of GU or used clothing stores if they had a half-decent income and some job security.

"Abe has been campaigning to correct the wage disparity between regular salaried workers and contract workers - who make up almost 40% of the labor force - that companies rely on to cut costs, hoping this would help boost spending."

Well, it hasn't worked has it?

Young people are poorer than ever.

When I came here first I was astounded by the number of brand name bags to be seen on the laps of almost every girl.

In fact, I had no idea of the price an thought they were cheapies-I once counted 6 high end bags at 2-3k US a piece in one carriage.Nowadays, that is impossible.....

It's the social and economic policies created by Japan's leadership that's hurting the economy and society. One example of that is exhibit A: Making people be more frugal due to having systems of low wages and low job security. Not to mention the connivance between the government and the corporations who are benefiting from it, for now. When it doesn't turn out how they wanted, they blame the average working, taxpaying citizen who are just trying to make ends meet.

private consumption - roughly 60 percent of Japan’s gross domestic product

Well there's your problem right there... when over half of your economy is built on consumption, there's a lot of non-essential consumption occuring, primarily of status symbols and other such things that one doesn't really need. The likes of Dentsu work their hardest to convince you you need it and keep things rolling. But any hint of frugality and it's OH NO! the economy! Good riddance I say.

And kudos to the young for seeing the glaring fallacies in the consumption-based economic model and not being suckered.

So, how's that Abenomics thing working out for them?

Who would have confidence in the future when the following are true?

wages are stagnant

the government is shifting the tax burden from companies to individuals

medical care costs are soaring

You'd have to be a fool not to save now for the future.

Less materialism would be great for the planet. For a healthy society, ideally it would be from choice, not gaman or putting on a brave face. We don't want people bottling up dissatisfaction. However, I suspect that after an initial period of adaptation, people won't actually care about not having non-essential things. They'll just see them for what they are. There is definitely some truth in the expression that your possessions own you.

As descendent mentions, all of us are bombarded with the most voluminous, specialized, and personalized commercial propaganda ever produced. If people can resist the "happiness is one purchase away" genie in this form, that is some achievement. Especially for the young.

"When have you been here since, JeffLee? 1945?"

Not that long. Japan has had strong gdp per capita figures, which indicate living standards. In the 2000s, real GDP per person has grown higher in Japan than in the US, Canada, the UK, and the euro area,

https://ftalphaville.ft.com/2014/12/04/2059371/did-japan-actually-lose-any-decades/

Well, maybe if the older generation didn't constantly decide how to spend the millennials' money (and their kids' money, and their kids', and their kids') there would be no problems. How on earth can they realistically demand that millennial, or anyone for that matter, go out and spend when if they do not save they will have nothing in the future because the nation is mired in debt from horrible government choices?

Reckless - "I make a lot of sacrifices living in Japan and not sure for what."

May I ask...Why are you here then? Not criticism at all, just wondering, since it sounds a bit like you're also of the group who needs to live frugally. It might give me some clarity on why I'm here as well.

Agreed, people in the U.S. SEEM to have it better with more space, cars, boats, etc. But that's if you place value on these things. I guess having a boat is more thrilling than toting an LV bag, but there are downsides to these toys as well. Just ask the people in L.A. who are stuck in traffic in their shiny cars.

Reckless - I hear ya

@Reckless

Yes, housing here has long been pretty bad, but it is getting a lot better, not worse, despite the "recession." Since you live in Tokyo, you should be comparing your living space and transport conditions with any relatives you have in Manhattan or London, etc.

Tokyo ranks quite well on international housing affordability indices.

Most of things are shit anyway. Don't buy things you don't need. People in Japan were too rich and they were spending money for unnecessary things. System needs your spending, because otherwise it will collapse. It can't continue forever though. Now it's the time, seikimatsu is coming.

Not spending is all good and well and I commend them for that. However, I for one, am not working hard just to put money into a savings account that my family will use to pay for my lavish funeral or keep for themselves after I'm gone.

19-year-old Kaoruko Shimada. "Even if money falls from the sky, I wouldn’t spend it."

And that's how it should be. If we don't, we will finish destroying this planet in the name of a good economy.

The day I start seeing these 'frugal and thrifty' millennials trading in their 7~10 thousand yen a month Smartphones for a 'garakei' costing a tiny fraction of that, that's the day I'll start believing this pabulum about how cost conscious they are.

What gets conveniently left by the wayside is that Abe and his predecessors in the LDP created the policies that made businesses stop hiring fulltime and contract out for help.

Abe stating that he is working to close the gap in wages, it's bullshit, when he is responsible (in part) for creating it in the first place and it's backfired on him!

@JeffLee Oh yeah. Jeff is right on this one. Go and look at most OECD countries and none of them has done particularly well in the last decade or so. Developed economies have slower growth, it takes adjustment, and Japanese people have done reasonably well. Nessie brings up various factors that should cause, ... dissatisfaction and unease... but compare them with almost any other country and Japan is managing well. How could Japan adjust faster without creating unacceptable instability. It can't. Nobody can.

One thing I particularly like about Japan is that it is not THRASHING. Things change slowly. Pretty well everyone knows the rules, and the work-out, or adjustment to shocks, occurs more slowly than in a boom and bust environment. That has value for life planning, saving, investment, etc. Think of all the poor suckers who have been elated at Obamacare, and now they might lose it. What a mountain of aggravation that will be.

Oh sure, Japan does not have huge homes and all that ... well... junk, really.... but a person can secure a safe place to build a family and have them be educated to world class standards.

And as far as the raised standard of living, well, goods are of high quality, service is about excellent anywhere you go. People are educated and generally friendly. No tipping. You can get cheap goods or expensive goods. Financial services are modern. Internet access is great by world standards. Technology levels are high. And I agree with Jeff that it continues to get better. My glass is half full, and I am not going to complain that it is half empty, especially if filling the glass will just spill the whole thing.

You made a small mistake in your headline.

"Japan's economy a bad omen for millenials"