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Weak household spending dampens Japan's recovery hopes

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The spending may have slowed but I can bet the savings are up

1 ( +4 / -3 )

The job market, however, remained tight. The unemployment rate was unchanged at 3.1% in December, while the ratio of job offers to job seekers stood at 1.43 in December—meaning there were 143 jobs for every 100 job hunters—the highest since 1991

What kind of jobs? What kind of benefits were offered with these jobs? We need more info.

“While the corporate sector is recovering steadily, consumer sentiment remains stagnant as people are concerned about future uncertainties,”

Translation: The 1% is getting richer and the rest of the population is getting screwed. Abe's Bakanomics isn't working. Trickle-down economics doesn't work. Want to get the economy going and the people spending, rasie wages. Most people are not earning a living wage. How are they going to spend?

The nation’s entire economy is lacking strength as spending, which accounts for some 60 percent of GDP, is still slowing,” Shimoda

because people don't have money to spend.

The BoJ had hoped that consumers would spend more if prices were rising, but wage growth has fallen below expectations, meaning workers have less money to spend.

There you go!! You have your answer!! Raise wages NOW! In the US they have the fight for 15. Here in Japan, we need the fight for 1500.

6 ( +12 / -6 )

all I can say is my situation, I just see rising taxes, and take home pay falling, then when I go to spend it the higher sales tax,,,

the only thing that might conceivably get me to spend is to buy a home if there was some free land incentive or something like that. i don't need gimmicky electronics such as a rice cooker that makes bread, i am fine with a cheap made in china tv, and will run my 2003 honda until the wheels fall off,,,

13 ( +15 / -2 )

Maybe if abesan used some of the billions of yen he gave to other nations to stimulate the job market in JAPAN or to even boost the work force even for a short term the spending might increase but I guess the would be a stupid idea compared to abenomics which is obviously showing much better results. :-/

9 ( +11 / -2 )

Oh, havent you guys heard of Premium Friday yet? That is going to solve everything! According to TV, on the last Friday of the month selected people at selected companies can leave work at 3pm! As far as I see, they will go straight to the bar and start drinking beer, as Premium Malts beer seems to be trying to sponsor it due to the name. All that spending by a few people on that one day a month is sure to have a huge impact. sigh

15 ( +18 / -3 )

Is there any possibility the increase or fear of an increase slowed purchasing? Yes, "Japan, first" may help the Japanese economy out of its multi-year problem. The feel good about foreign aid needs to slow.

1 ( +1 / -0 )

Household spending have fallen due to the fact that people don't spend so much with their own family ( sort of stingy ... lol ) ! However, these same people are out with coworkers and spend a lot on drinks as well as dinner outside almost 3-4 times a week! They don't care so much about prices and money then. It's common knowledge that people especially in cities like Tokyo prefer the company of coworkers rather than family members...

-2 ( +2 / -4 )

Of course there are more jobs. Just in my city, half the Brazilian/ Peruvian Japanese have left this country. Hence the numbers up.

A couple of weeks ago, on the way to meet my boss in order to sign a new contract, I was rehearsing in my car how I was going to ask for a pay raise. Guess the results? Jimmy jr will have to wait a little longer for his ps4. Luckily his Super Famicom will last a few more years.

3 ( +4 / -1 )

0 ( +2 / -2 )

I hate it when people turn every topic into the "yeah, but in the US we..."

3 ( +7 / -4 )

Weak household spending dampens Japan's recovery hopes

Cue recycled response to recycled headline.

5 ( +7 / -2 )

So, you increase sales tax, decrease corporate tax without any wage increases and wonder why household spending has dropped? I'm pretty sure most elementary school children could solve this equation.

7 ( +10 / -3 )

The low spending on appliances and commodities are partly due to over-reliable and high quality products for consumers AND partly due to lack of new innovative & exciting products in the market. Self life of a Japanese product is way too extended.

-8 ( +3 / -11 )

But look at the bright side as far as sales, the CHINESE sure buy a lot of Japanese merchandise :-/

-1 ( +1 / -2 )

Jimmy jr will have to wait a little longer for his ps4. Luckily his Super Famicom will last a few more years.

Jim, I'm sorry you couldn't get your little guy a ps4. As a dad, I understand that the greatest joy in life is seeing your little one squeal with joy when dad gets him something new. I feel for you.

When they talk about there being more jobs out there, they might be talking about jobs that might be paying less than 200,000 a month for full time. We don't know. They need to disclose more about what kind of jobs are out there. People have families to feed. But the Abe regime couldn't care less.

2 ( +3 / -1 )

the latest in a series of blows to the nation’s faltering growth plan.

Faltering growth plan? There was no plan in the first place, just a rinse and repeat policy that worked about 4 decades ago that led to the bubble and disaster afterwards.

What kind of jobs? What kind of benefits were offered with these jobs? We need more info.

First off Japan reports it&s unemployment numbers in it's own unique manner. Anyone employed, even for 1 hour per week, is counted against the unemployment numbers. Under-employment is a totally different situation. These numbers are screwed with to keep people thinking that everything is stable, and people who need a job can get one.

Typically though the jobs that are available do not pay a living wage and are PT or hourly, and mostly in the service or food industries that have high turnover anyway.

Never put one's faith in the numbers the government puts out here, with regards to employment and the economy.

8 ( +10 / -2 )

Prime Minister Shinzo Abe came to office in December 2012 and launched his “Abenomics” growth plan—a mix of massive monetary easing, government spending and red-tape slashing—but growth remains fragile

Not true. He never launched the red-tape slashing part of his plan, which was the part that could help to boost growth.

Bank of Japan (BOJ) officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for their failure to achieve a promised two percent inflation level.

The BOJ should be blaming Abe for not doing structural reforms.

Want to get the economy going and the people spending, rasie wages. Most people are not earning a living wage.

I could swear the opposite is true. Japanese people are living after all, by-and-large - at least where I am.

How are they going to spend?

In order to spend more, yes people could do with more money (that and brighter hopes for the future). But what are they going to do in order to EARN more money? This is the key question. What can Abe do to enable people to EARN more money? Remember, just giving people money for nothing without increasing the amount produced in the economy is nothing other than inflation. Inflation is not what consumers want (see Venezuela). Consumers want stable to lower prices, and higher wages. Increasing productivity and earning power is how to get this.

So, you increase sales tax, decrease corporate tax without any wage increases and wonder why household spending has dropped?

The increase in sales tax was a couple of years back already. I don't think the crappy economy should be put down to that, because the economy was crappy before that as well.

3 ( +5 / -2 )

Cue recycled response to recycled headline.

easy job for AFP writers (!)

1 ( +1 / -0 )

It seems strange to me that with the current labor shortage, wages are not raising. What is not strange is that people are not spending more then they have to, or more than they consider prudent.

What is even stranger is that the corporations and the government do not see the connection or are so unwilling to resolve the juxtaposition.

4 ( +4 / -0 )

Only buy what I need Abe-kun. Sorry.

0 ( +2 / -2 )

I could swear the opposite is true. Japanese people are living after all, by-and-large - at least where I am.

most are 2 income households.

Remember, just giving people money for nothing without increasing the amount produced in the economy is nothing other than inflation.

Its money in people's pockets. look at the fight for 15 in the US.

Consumers want stable to lower prices, and higher wages. Increasing productivity and earning power is how to get this.

Agree. Structural reform is necessary too. No doubt about that. But we also need a wage increase. People are not earning enough. And you might find that a pay raise might just help people by motivating them.

2 ( +3 / -1 )

Jim, I'm sorry you couldn't get your little guy a ps4. As a dad, I understand that the greatest joy in life is seeing your >little one squeal with joy when dad gets him something new. I feel for you.

It breaks my heart going home, look at my family and think I can't provide them more than the basics.

When they talk about there being more jobs out there, they might be talking about jobs that might be paying less than >200,000 a month for full time. We don't know. They need to disclose more about what kind of jobs are out there. >People have families to feed. But the Abe regime couldn't care less.

So, the average factory worker will make about 180,000. Some factories have those obligatory 2 hours overtime/day (yes, this is the reality) then people can make 200,000, luckily 230,000.

I really hope that ABE gets his back side kicked of the politics, because the guy is a disaster.

2 ( +3 / -1 )

It breaks my heart going home, look at my family and think I can't provide them more than the basics

I hear you, and I feel your pain. But at least you can provide that my friend. Others can't.

So, the average factory worker will make about 180,000. Some factories have those obligatory 2 hours overtime/day (yes, this is the reality) then people can make 200,000, luckily 230,000.

Yes. That's right. And those idiots in Kasumigaseki and the BOJ wonder why people aren't spending. Spend what, for god's sake? People are struggling to put food on the table.

I really hope that ABE gets his back side kicked of the politics, because the guy is a disaster.

I'll second that motion and support it.

2 ( +3 / -1 )

It seems strange to me that with the current labor shortage, wages are not raising.

I think this is indicative of critical problems in Japan's labour market.

Certainly the government has done nothing about it other than hold lots of committee meetings.

As for corporations, if they want to secure labour that much, they would raise wages. That they opt not to suggests to me that the labour shortages may not be as great as reported. If you could make so much more money by having extra staff working at higher wages, you'd do it. No reason not to. So it sounds to me like the wages are out there on offer just in case the businesses can get lucky finding someone to work for a low wage, but because there are no takers there is a "labour shortage". The flip side is that there is a "good jobs shortage".

On the other hand there a lot of stale old corporations laden down with excess workers but due to cultural and legal reasons don't downsize their operations, condemning their businesses to low profitability, and locking up productive human beings who could be doing something better for themselves elsewhere. The workers opt for job stability rather than better wages.

The government needs to make the business environment far more attractive to see for the creation of better jobs, and overhaul the labour market rules to incentivize workers to seek out better paying jobs rather than stick it out with a weak employer for life in the name of job security.

In short the government needs to encourage and incentivize risk taking by both sides of the labour market.

1 ( +3 / -2 )

"It seems strange to me that with the current labor shortage, wages are not raising."

Yes it is strange. It's because the shift toward shareholder capitalism among Japanese companies means they need more profits for dividends and also as a cushion against another financial crisis. That means no raises for their workers. This shift is a result of the reforms so many people say is Japan's panacea.

-1 ( +1 / -2 )

Wages wont go up when it's the businesses that dictate what salaries are to new employees even in full time positions. Japanese job seekers do not negotiate, nor expect to, negotiate their salaries, hence part of the problem.

6 ( +6 / -0 )

Maybe it's time for them to realise that, hey, people AREN'T going to go shopping if the threat of price increases are on the horizon and there is still no sign of wage increases besides enough for an extra gyudon a year.

1 ( +4 / -3 )

It's because the shift toward shareholder capitalism among Japanese companies means they need more profits for dividends

If I were a shareholder of Japanese stocks, I would expect high dividends.

As it is, I don't want to risk my money to own a share of an Olympus, Toshiba or TEPCO, so they would have to sweeten the deal to get me to directly buy in.

And whether we like it or not, the GPIF pension fund is invested in Japanese stocks, so anyone with a claim on the pension fund should be expecting Japanese companies that they indirectly own shares in to pay them for the risk they are indirectly being forced to take.

This shift is a result of the reforms so many people say is Japan's panacea.

Nice alternative fact there! I challenge you to provide a single instance of anyone claiming that Japan's dual labour market is what the doctor ordered.

The opposite is the case - the reform calls today are all about eliminating the duality in Japan's labour market.

As this article notes, "protecting permanent employees led to the expansion of a second tier of nonregular workers". And the protection of permanent employees is rooted in "the view in Japan that big companies are public institutions with a responsibility to provide employment"

https://www.wsj.com/articles/why-japans-economy-is-laboring-1459929574

So which is it? Do companies belong to their shareholders, or do they belong to the public and have a responsibility to provide employment? Japan needs to make this choice clearly and reform its laws accordingly.

0 ( +1 / -1 )

So recovery doesn't depend on the export market, but on household expenditure.

0 ( +0 / -0 )

Actually gaijintraveller, you are right! The international markets that the great leader Abe is relying on to rebuild the Japanese economy no longer belong to Japan. The only way to rebuild Japan's economy is through domestic sales, but these old twits have their heads stuck in the 80's and refuse to use more innovative strategies to promote domestic spending and get more money into circulation. Instead they just keep borrowing money and further increasing the world's hugest public debt in the hope of a miraculous recovery in international markets, which is not gonna happen, ever! Look at all the large Japanese electronics companies that have gone down the spout in the last decade. And then, look at the car companies that are producing less than 50% of the cars they were producing a decade ago. These wombats just ignore the international trends and all these companies that are faultering and just keep recycling the same old economic policies from yesteryear. It's just ridiculous! Japan's economy is doomed!

0 ( +0 / -0 )

"Nice alternative fact there! I challenge you to provide a single instance of anyone claiming that Japan's dual labour market is what the doctor ordered."

check the various amendments to the labor standards and other laws that expanded the scope of temporary, low-paid workers. These measures were promoted by the business community.

"the view in Japan that big companies are public institutions with a responsibility to provide employment""

The view is largely correct. Most corporations throughout the world wouldnt exist without public spending and active public support, including bailouts of all major Wall. St firms, JAL and GM, just to name a few. Boeing would be dead without defense spending and the US govt ban on German aircraft production during the postwar era. Nearly all corps benefit these ways.

-1 ( +0 / -1 )

The business community may have promoted the introduction of more flexible contracts, but I don't believe anyone ever said reforms that would lead to duality in the labour market would be a "panacea". The duality is anything but a panacea outcome and as such the labour market today remains in desperate need of fundamental reforms (rather than incremental changes).

The view is largely correct. Most corporations throughout the world wouldnt exist without public spending and active public support

Some yes, but not most. And no where is it written that every failed company must be bailed out with public money. That's a policy option (one that weak politicians tend to favour).

0 ( +0 / -0 )

"Some yes, but not most"

You're always railing against huge govt spending. Where do you think most of that money ends up? And why do you think the govt in is a steep deficit while corporations are in a big surplus, raking in record profits in 2015?

-1 ( +0 / -1 )

I'm scared to spend money and seek to save and diversify my risk by prudent investing. Japan is in dire straits, traders here tell me the same thing-they are just surviving Of course, there are exceptions but as we all know Japan is in a slow free fall!

0 ( +1 / -1 )

Saving is good but the value of yr paper is dropping.invest in anything, U can sell.if U save too much, Yr bank might go bankrupt and wow and wala, all papers are gone.

0 ( +0 / -0 )

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