New Year has started, all the “Nengachos” (New Years Card, mine shown on the side) are read and work has started again. We are back to business as usual, but are we really? I would like to argue that this year-end had been different in an economic sense. Of course, in Ginza the lines were as long as usual for the fukubukuro (福袋, lucky bag sold on New Year’s Day), but observing the consumer behavior at the larger department store Aeon nearby, this year was rather slow. The store was crowed as usually during weekends and holidays, but this time I had noticed that apart from food and basic household goods other products were not purchased. Special sales with great deals on winter jackets, bags or dieting goods were left on the side. Even on January 4th specially set up tables with fukubukuro were still full. I can tell you the deals were great, but it seems that the general public was simply not interested to buy more than the most basic needs.
I had wondered why, when with today’s Nikkei Shimbun the answer was shown to me. Based on their questionnaire of 618 Japanese I was amazed to find the high savings goal for 2012 with more than JPY 1,500,000 for 16% of the people asked! Although at the same time 34% had no set goal for savings, only 2% of the respondents had no plans to increase their savings. See the actual savings goals for 2012:
No savings planned: 2%
Have not set a savings goal: 34%
Savings goal of at least JPY 300,000: 9%
Savings goal of at least JPY 500,000: 12%
Savings goal of at least JPY 1,000,000: 15%
Savings goal of at least JPY 1,500,000: 12%
Savings goal of more than JPY 1,500,000: 16%
Looking at the amount expected to be saved by many Japanese it is not surprising for me that people are staying away from not absolutely necessary purchases. I guess an additional reason to save is the upcoming social security reform report (IH 12/01/11). Based on the info from Mercer the legislation should reach the Diet in March. Japanese residents are is facing higher costs in the near and long-term future:
– The consumption tax hike is moving forward with the 5% levy now due to hit 8% in April 2014 and 10% in October 2015.
– New medical co-payments for people ages 70-74 and a pension premium hike for people above a certain income threshold were included in some previews, but reportedly might not make the final cut.
– Tax deduction cuts on large pensions and for people who continue to work while they collect their pensions have not been ruled out.
– A 2003 law that halved the 20% capital gains tax will be allowed to lapse at the end of 2013 to help fund social security.
Even though based on the Mainichi Shimbun news the most recent BOJ easing policy is effecting Japanese economy, but still it is unlikely that the common Japanese consumers can have a positive impact on the total Japanese economy. I guess the time has come for me as well to review my budget and my spending.
Brought to you by Sibylle Ito (伊藤シビル)