A woman looks at discounted clothes inside a shopping mall in Tokyo. Photo: REUTERS file
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Japan's COVID crisis reawakens deflation fears as cash hoarding returns

57 Comments
By Leika Kihara and Kaori Kaneko

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57 Comments
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Sensible. Save your money and see how it goes, it's not hording it's just not being stupid.

It's up to the individual what they use their hard earned money for, why the negative connotations for anyone not frivolously wasting money on non essential crap.

37 ( +38 / -1 )

"A spike in coronavirus infections in Japan is driving local households to do what they have always done in times of crisis: spend less and save more"

That's what any rational person would do.

31 ( +31 / -0 )

Well, of course, the real problem is that with people spending less, there is less income from taxes, which makes it very hard on the LDP. They might have to cut down on Cherry Blossom parties, visits to expensive Hostess Bars, and the like!

29 ( +30 / -1 )

Japanese households are full of consumer goods already-there isn’t a need to buy more plus the population is becoming top heavy with the aged that don’t need more...

24 ( +24 / -0 )

Yeah that’s called being smart. Hoarding implies that doing so is unnecessary. Japanese minimum wage isn’t high enough, job market is terrible, the government refuses to do another relief fund even though people need it.

A universal basic income would help negate this but Japan and Japanese are slow to change and risk adverse this the “hoarding”.

22 ( +26 / -4 )

My cash is my cash. If I do not spend my money, why is it called hoarding? I think businesses and banks are getting what they pay out, which is very little. Greed is not good.

20 ( +20 / -0 )

You cant win with economists in my opinion. They are afraid of deflation and inflation. No win.

19 ( +19 / -0 )

There is a pandemic spreading not only in the Japan, but around the world. We are all told to stay home, not go out, stay away from others if possible. So when people do this and the numbers for consumption decrease, the economists start crying deflation! What are people supposed to do. There is great uncertainty, nobody knows what is going to happen next, so the prudent thing is to save and be ready for anything. When the crisis passes people will start to spend again, simple as that.

19 ( +19 / -0 )

It's pretty simple, people see absolutely no leadership or assistance coming from the LDP and so have to save for any future contingency. Crisis management 101.

19 ( +19 / -0 )

People were not being paid enough are not being paid a liveable wage so there is nothing left on the bone, companies have huge cash hordes they are shooting themselves in the foot by not passing it on to employees. Pretty simple.

18 ( +18 / -0 )

Great comments by everyone this fine morning. I would also add that for some, like the 20 and 30 somethings, the pandemic may have been a wake up call. I'm sure many realized how little savings they had and how important they are for times like these.

I know that's how I felt when this all started. So I guess saving my hard earned cash is considered "hoarding", according to these multi-billion dollars companies.

17 ( +17 / -0 )

“We don’t expect Japan to return to deflation“

The BOJ governor Kuroda is completely out of touch and delusional. Japan has been in deflation for quite some time now and in times of recession, it’s only reasonable for people to spend less and save money. The only thing that can boost the economy is increased government spending, which the Suga government is adamantly refusing to do.

16 ( +16 / -0 )

Bank deposits surged 9.3% in December from a year earlier to a record 803 trillion yen ($7.74 trillion).

Households are expected to have saved 45.8 trillion yen, or 8.5% of gross domestic product (GDP), last year, up from 14.5 trillion in 2019, estimates by HSBC showed.

"Unless fears over the pandemic are wiped out, the money piling up in bank accounts won't be spent," said Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute.

Fifty-year-old Hiromi Suzuki is doing just that having quit her job at a Tokyo novelty store in December after the pandemic hit sales.

"I try not to spend money," she said, walking her dog in the city. "Since I don't go out much, I don't buy cosmetics or clothes anymore."

What she did is make sense, she tried to avoid being bankrupt or feel into debt. Currently in Japan 40% workforce is non-regular worker that can be terminated anytime.

https://www.japantimes.co.jp/opinion/2018/02/12/editorials/job-security-irregular-workers/

16 ( +16 / -0 )

A spike in coronavirus infections in Japan is driving local households to do what they have always done in times of crisis: spend less and save more, stoking fears of a deeper retail recession and grinding deflation.

Fifty-year-old Hiromi Suzuki is doing just that having quit her job at a Tokyo novelty store in December after the pandemic hit sales.

"I try not to spend money," she said, walking her dog in the city. "Since I don't go out much, I don't buy cosmetics or clothes anymore."

These articles about deflation in Japan are always from a business perspective.

Here is a woman, like millions of others, out of a job at an age where it is difficult to find one and focusing on bare subsistence. Something is wrong in the third largest economy.

However, the focus is always " Deflation is going to hurt the massive holdings of these institutional investors and rentiers and landlords!!"

16 ( +16 / -0 )

You gotta love these bankers...

“People are being selfish by not spending all their savings — even after being fired — and supporting banks and big business. They don’t understand how regrettable it is that they keep any money they’ve earned, and if they continue this way we might have to lower the prices on good, which is definitely not what the consumer wants! I simply cannot understand why these people aren’t sacrifice more and are ‘hoarding’ money! People need to go out more... the law doesn’t actually say it’s mandatory to stay home! Quickly spend your money and go home. Simple as that.”

15 ( +15 / -0 )

@Yubaru

While that is true ...people are not spending on eating out,travel,leisure or cosmetics etc etc.

Perhaps companies should pay better wages and stop being such skinflints!

They really are bringing it on themselves!!

13 ( +13 / -0 )

Nothing wrong with hoarding your hard earned money.

13 ( +14 / -1 )

I was translating an article today which mentioned that average wages in OECD countries are 1.5 times higher than those of Japan. That's half the problem right there!

13 ( +13 / -0 )

It is the corporations that are hoarding, the people are merely surviving

13 ( +13 / -0 )

The govt and corporations are like Smaug sitting on a gigantic pile of gold and accusing peasants of hoarding.

12 ( +13 / -1 )

Nice to see Japan has taken something assumes from the pandemic. Save money! (or invest, but whatever). Big business and the government aren't prepared to foot your bills in a crisis.

11 ( +11 / -0 )

Great responses today. We get fed a steady diet of articles where we peasants are just like pawns in a big market game, there to feed or be fed into the hungry beast that is the Economy. Missing from these articles is any human perspective. Since when was it a civic duty to consume? As so many have said, the pandemic has brought into relief that a more frugal lifestyle makes sense in so many ways - for us, for our children, for the environment, for society.

They can write these panic-stricken articles haranguing us to spend, consume, eat, travel, Go To Olympic all they like, but more and more of us will behave as rational beings do, and turn our backs on all the unnecessary flotsam and garbage they try to pursuade us to fill our homes and lives with. And if an economic system relies on such ridiculous, self-destructive behaviour for its survival, then well, its time is coming, and we need to replace it with a more rational, sustainable one.

10 ( +10 / -0 )

there is less income from taxes, which makes it very hard on the LDP. They might have to cut down on Cherry Blossom parties, visits to expensive Hostess Bars, and the like!

Never!

9 ( +9 / -0 )

90% of my expenditures go on bills, taxes and food. I'm hardly contributing any longer to consumption. The pandemic is what it is and so is the LDP.

9 ( +9 / -0 )

"Returns?" Hardly, Japanese are famous for keeping cash on hand when things get rough, happened all throughout the bubble years, and afterwards as well, as "real" income continued to fall, and taxes rose.

This pandemic is just a different type of "rough time" and the Japanese households are holding on to money tighter in many areas.

BUT, this kind of makes no sense in many ways as national news reports showed that there has been a huge INCREASE in spending on home electronics and in particular what is known as "white electrical products", in fact sales, as reported by some outlets, are higher now than in decades, as many people are staying home, and are improving the quality of their home appliances.

8 ( +8 / -0 )

Some very fine comments this morning. Seems most JT posters have nailed this topic. I'll just add that Japan has been in deflation since 1990, and is a shining example of the ills of late stage capitalism, with or without Covid. The mega corporations and the moneyed, "rentier" classes can whine all they want, but until they seriously start sharing their ill-gotten gains, this downward spiral will continue.

8 ( +11 / -3 )

Not Yet Desperate, Japan and South Korea Plod Toward Vaccinations

The slower pace gives the East Asian countries a chance to learn from mistakes elsewhere but also poses risks as more contagious and perhaps deadlier variants of the virus emerge.

https://www.nytimes.com/2021/01/31/world/asia/japan-south-korea-vaccinations.html

7 ( +7 / -0 )

“People are being selfish by not spending all their savings — even after being fired — and supporting banks and big business. They don’t understand how regrettable it is that they keep any money they’ve earned, and if they continue this way we might have to lower the prices on good, which is definitely not what the consumer wants!

Precisely, the average Taro and Keiko can be so selfish. Poor corporations.

7 ( +7 / -0 )

No wonder about deflationary phenomena. I've consumed less and less for years predating the virus crisis. But the overall life quality hasn't so much deteriorated while I have made no effort to stay very frugal.

6 ( +6 / -0 )

Deflation has been around for 20 years.

6 ( +6 / -0 )

Raise interest rates to stop supporting zombie companies and people will actually save less for the future when they can get a return.

5 ( +6 / -1 )

everyday people with little sense for reality do not believe some mainstream news how food getting cheap etc etc and instead of spending for meaningless shopping buying only what is needed and sure trying to save more money.they dont care some points here and there.

what do you expect when income became less and gov help except one 100.000jpy is none...unless if you are member of tokyo olympics preparation sponsor team...

5 ( +6 / -1 )

Hoarding? Seems like the person writing this article is hoarding any attempt to make a story out of anything. It’s called budgeting and smart spending. If there’s no work, then there’s nothing to buy. Use common sense, please.

5 ( +5 / -0 )

Just get out while you can.

5 ( +5 / -0 )

The problem here is the persistent decline in consumption since the 1990s. Simply, Japanese people of all classes are getting poorer by each year.

4 ( +4 / -0 )

I’ve not noticed this deflation thing. Food prices seem higher and package sizes keep shrinking...

Meanwhile, the BOJ is now the largest stock and bond holder in Japan.

BOJ should be doing stimulus like infrastructure. Jobs. Not stocks and bonds for rich people.

3 ( +6 / -3 )

hitting spending on services, which makes up one-third of total consumption.

The central planners have to just get over themselves, there is a frikkin pandemic going on. It is going to effect economic behavior, and how it effects behavior is up to each and every individual.

Just let the people be. The people will figure out for themselves what is in demand through experimentation and the wonder of free market prices.

The public is it wearing stupid Abenomasks purchased on our behalf by the central planners, the public is wearing masks that are more fashionable and cooler and surely more effective as well.

Just keep these central planners out of the economy and things will work out pretty fine, or at least better than with central planners in control of our spending.

Cut government spending big time and cut taxes!

3 ( +4 / -1 )

Why not stop taxing everything across the board. Seriously, no reason to add tax to toll roads, services, etc. Just a sales tax added to consumables would have sufficed. This way the hard working people can afford to eat out every now and then vs paying a tax they will never get back

3 ( +3 / -0 )

Wouldn't it be safe to say that COMPANIES are hoarding cash not the people by not paying their workers a livable wage?

3 ( +3 / -0 )

Noriko san, please now focus on not getting sick, and not what you will do whenever the govt decides to do something about the crisis.

You are at an age where this disease can very easily be fatal.

1 ( +3 / -2 )

The public is it wearing stupid Abenomasks purchased on our behalf by the central planners, the public is wearing masks that are more fashionable and cooler and surely more effective as well.

Raise your hand if you have seen people in Japan wearing Abenomasks.

This crony capitalist boondoggle is not due to central planning but the collusion of malign corporate interests symbolized by Keidanren. They exert their influence on politicians who respond to their desires, for example for deflation to expand their asset bubbles.

The central planning comes from Keidanren and is parroted and implemented by the LDP.

1 ( +1 / -0 )

If I had cash to hoard I would be hoarding it just like all the large companies.

1 ( +1 / -0 )

Oh, the horror! Falling prices! What could be worse?

1 ( +1 / -0 )

That’s real nice Noriko Indo occasionally indulges in luxuries like tuna sashimi, her favorite food. I love to read stories like this. I guess as the article implies, others are shoveling their money away under the carpet, filling their jam jars up with loose coins, screwing on the lid and putting them behind the fridge. Others are rubber banding their carefully earned notes and tucking them under the floor lining, patting it down afterwards, some folks are sticking tubes of coins together with Daiso sticky tape.

0 ( +7 / -7 )

The price of cars and motor bikes have gone up over the years. Maybe because cars are much more high tech now. Even a fingerprint door lock has to cost more than a mechanical key lock.

0 ( +4 / -4 )

When all else fails save like the world is at war again! The inheritance tax will not save the government from their epic screw-ups!

I guess the education industry will start to benefit because people may start trying to upgrade their skills to be a more desirable employee.

0 ( +1 / -1 )

Another doom and gloom article from the media. Click bait.

0 ( +5 / -5 )

@Leo You cant win with economists in my opinion. They are afraid of deflation and inflation. No win.

Absolutely correct. Economists are not trying to "win" but keep a stable equilibrium in the middle between deflation and inflation. Economics is not an exact science. Granny always has something different in mind:-)

0 ( +0 / -0 )

Raise your hand if you have seen people in Japan wearing Abenomasks.

Yeah, I made a typo - /is it/ was meant to be /isn’t/ with respect to use if Abenomasks.

This crony capitalist boondoggle is not due to central planning but the collusion of malign corporate interests

Well we agree there in spirit.

I want a system of free enterprise, free market prices.

But to me it is absolutely central planning when the PM undertakes to deliver more than 100 million of these things which virtually all end up being wasted.

A decentralized approach based on individuals making their own decisions based on free market prices will virtually always produce better results with that money.

Central government does get it right sometimes, but only for about as many seconds in a day a broken clock is correct!

by Keidanren. They exert their influence on politicians who respond to their desires, for example for deflation to expand their asset bubbles. 

You meant to say inflation I believe, but no I think you place the blame at the wrong feet. It is the central government that is commanded by politicians That wants the inflation, and that is because spending money is the only way most of them know how to get themselves elected. And inflation is like a tax except it’s one the politicians don’t explicitly vote for.

They have told the public that shock horror, stable prices are bad for us, and that we ought crave 2% inflation.

But I don’t believe Keidanren is that much of a player, as the centralized government is. At least for one thing, Keidanren has been speaking out about the stupid system of collective wage negotiations.

Wages should absolutely be set as per the circumstances of each an every individual employer, and rather than seek uniformity, Japan should be seeking economic dynamism and embrace change, rather than stability which is the road to stagnation. Business that pay poor wages should go out of business when their staff desert them for greener pastures!

I see little need for Keidanren though. Disbanding it would be fine.

0 ( +0 / -0 )

Japan's COVID crisis reawakens deflation fears as cash hoarding returns

So what do these genius politicians expect after locking people in their homes and destroy their jobs? That they go out and spend??

0 ( +1 / -1 )

""Once the pandemic is over, I'd like to splurge on travel and shop like crazy at a department store," she said.""

AMEN.

0 ( +0 / -0 )

Obviously JT gaijin is not affected one bit; getting richer is all they do while living and moaning about Japan.

With "no impunity|.

Your obsession with me is a disease.

0 ( +0 / -0 )

Japan has a COVID crisis?

didn’t know that

-1 ( +5 / -6 )

It’s probably only having less money instead of hoarding it, for most of the people. The small rest only can hoard, what makes those bank deposits surging an average of 9.3% Ask all other average normal people if their deposits also rose astonishing 9%, you will probably get a punch into your dumb faces. lol

-2 ( +0 / -2 )

My American friend said before. They are punished if they save money. Americans know their economy is vital as people spend money. In Japan, saving money is virtue. Give money again 100,000 yen.

-3 ( +3 / -6 )

A universal basic income would help negate this

No thanks.

-4 ( +6 / -10 )

"Simply, Japanese people of all classes are getting poorer by each year."

Obviously JT gaijin is not affected one bit; getting richer is all they do while living and moaning about Japan.

With "no impunity|.

-5 ( +0 / -5 )

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