Good day one and all
I hope you’re enjoying the festive season, and for those still working then at least you’re finding time to take some rest
Eamonn has selflessly brought you all the Japanese data and news that’s been out over the past couple of days and this article by the BBC’s Linda Yueh highlights the concern that Abe must have over the fact that, for the first time since records were collected in 1955, Japan’s population is drawing down its savings and the savings rate, calculated as savings divided by disposable income plus pension payments, was negative 1.3%.
Says Yueh:
It’s a dramatic change from when the Japanese saved nearly a quarter of their income (23.1%) when the savings rate peaked in 1975.
Japan had the highest household saving rate in the OECD in the 1960s until it fell to the lowest. After all, an aging population draws down savings and Japan is the fastest-aging country in the world; its population has been shrinking for a decade.
It’s another blow to the Japanese Prime Minister Shinzo Abe, who just won another term to try and implement his policies dubbed Abenomics. On the campaign trail, he said that Abenomics aimed to raise wages and employment to revive the economy and defeat deflation or price falls.
Yet, earnings (adjusted for inflation) dropped 4.3% from a year earlier in November. It’s the steepest decline since the 2009 global crisis and marks the 17th month of falls.
Since their debt crisis in the early 1990s, the Japanese have been reluctant to borrow on a large scale. So, unless wages rise sustainably, it’s hard to see how household spending can. Without more domestic demand, firms are reluctant to raise wages and invest, which is why they still hold substantial cash.
Abe has a mandate for the introduction of another sales tax hike but the low turnout for his recent re-election sends a clear message that all is not well
Abe – Will he be smiling for much longer?
I’m off out now to see my beloved Southend United in Boxing Day action. Let’s just hope they stayed away from the Christmas pudding yesterday.
Have a good day out there, wherever it takes you.