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Japan Considered on the Japanese Economy

For the December 15 edition of the Japan Considered Podcast, Dr. Robert Angel interviewed Dr. Edward Lincoln, who is the director of the Center for Japan-U.S. Business and Economic Studies at NYU’s Stern School of Business in New York. Dr, Lincoln, an economist by trade, provides some prescient insight into the current state of the Japanese economy. To find the episode, click the link above and scroll down to the December 15th edition (though it might be tempting to listen to the other releases on the way there…)

Consumer spending in Japan: Next year’s economic bugbear?

The foreign press has been all over Sluggish Consumption Slows Japan Economy, an AP piece published yesterday (link is to the Washington Post version). The AP article seems to play down the possibility of a January interest rate hike, calling Bank of Japan governor Toshihiko Fukui ‘cautious’ on the issue, based on his comments to the Japan Business Federation (Keidanren):

We can keep an accommodative monetary environment led by very low interest rates for some time. We will tighten monetary policy if economic activity and prices develop in line with our projections.

With domestic consumer spending accounting for about half of Japan’s GDP, if it doesn’t rise, there’s no way the economy can keep doing so. However, Keidanren chairman Fujio Mitarai, who is also the chairman of Canon, said that he thinks corporate profits will soon be reflected in higher wages:

As the economy becomes more robust and corporate performances improve, those effects should cross over to the household sector.

He had better hope so.

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