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Nikkei: Japan’s Twentysomethings Not Spending Like They Used To

August 24, 2007
By Ken Worsley


On Wednesday, the Nikkei published its results of a survey concerning the spending habits of consumers in their 20s and 30s in Japan. The survey was done online in June and early July and received responses from 1,207 men and women in their 20s and 530 men and women in their 30s.

The results do not bode well for the future of consumer spending. According to the Nikkei, 13% of respondents in their 20s from the Tokyo area said they own a car, and only 25.3% said that they wanted to purchase one. When the same poll was conducted in 2000, the paper found that 23.6% of Tokyo residents in their 20s owned a vehicle, with 48.2% aspiring to purchase one.

29.6% of respondents in their 20s said that drinking was a waste of time, and 34.4% said they drink alcohol once a month or less. I remember a hip young marketer in Tokyo recently making an astute point that alcoholic beverages needed to be marketed in newer, fresher contexts in order to appeal to the younger market, who simply finds their products unappealing due to negative reinforcement. Perhaps what the industry needs is more along the lines of a miracle. I’d say the younger market might be catching on to what I would say about hard-earned disposable income: Don’t give it to companies whose business plan involves harming your health or quickening your death.

And that disposable income is increasingly harder-earned for young workers in Japan, who are more likely to be contract workers rather than regular employees. So what are they doing with that disposable income? The Nikkei tells us that although average disposable income was at 64,400 yen per month, up about 4,000 yen a month from 2000, 36% of those surveyed in their 20s said that they prefer to save their money rather than spend. This figure was up 8.2% from the 2000 survey.

Of course, we need to consider what kind of crowd in their 20s would be responding to an online Nikkei survey. We imagine that they might be professional job-holders in white collar positions. This might mean that we have more regular employees as a percentage of the group than the population at large, though I’m hoping to hear counter-arguments on this one.

However, if the group is indeed indicative of the views of Japan’s young professionals, we might assume that the population at large is spending less, since they would have slightly lower levels of disposable income.

Filed Under Consumer Spending, Demographics, Japan 

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Comments

4 Responses to “Nikkei: Japan’s Twentysomethings Not Spending Like They Used To”

  1. Contrarian on August 24th, 2007 6:27 am

    The surplus shrank 21.1 percent in July from a year earlier to 671.2 billion yen ($5.9 billion)… Exports rose 11.7 percent to 7.06 trillion yen… Imports climbed 16.9 percent to a record 6.39 trillion yen.

    Clearly, someone is spending. Who is doing it?

  2. Edward Hugh on August 24th, 2007 4:25 pm

    Hi Ken,

    This survey is interesting, although as yet hardly conclusive of anything. I tend to think about saving and consumption in terms of Modigliani’s life cycle model, although this needs constantly adapting for things like increasing life expectancy, changing behavioural patterns etc.

    Now one of the things I have long been thinking about was the impact of increasing life expectancy, and pension and other reform (or reduction if you prefer). One consequence of this should be that young people may tend to save more at earlier ages than previously. This is just a conjecture which needs to be confirmed by evidence, but things like this survey certainly don’t make me feel less confident that this will happen. If it does, of course, the macroeconomic consequences will be large.

    The big topic looking forward is surely going to be whither interest rates at the BoJ, and how the global markets will assimilate any absence of further increases if this is what we are going to get. With Bernanke possibly reducing, and the ECB now dithering, and deflation lingering in Japan, on top of having Abe in trouble, I find it hard to believe in a Fukui “best foot forward” scenario. We will see.

  3. Ken Worsley on August 24th, 2007 5:43 pm

    Edward, fully agreed - in fact, I had a bit of an existential crisis over whether any of the economic reports we see coming from Japan are conclusive of anything, especially given the disparity in claims we see when comparing, for example, what the Statistics Bureau and the Ministry of Health, Labor and Welfare.

    Certainly, living, working and interacting with Japanese in their 20s and 30s everyday leads me to believe that they are saving quite a bit. There is a general sense that they won’t be taken for, and that as pension premiums, health insurance fees and local taxes increase every year, they feel there is 1) Les money to devote to conspicuous consumption as well as the purchase of durable goods (which lose their value too quickly in Japan), and 2) Little certainty of having a state-sponsored pension that will be adequate, let alone a return on investment, in the future.

  4. Japan’s Retail Sales Down in July, Consumption Tax Hike Being Discussed Openly : Japan Economy News & Blog on December 2nd, 2007 11:06 pm

    […] that this seems to happen every month. In truth, it seems as though savings rates are staying high (especially amongst younger Japanese consumers), wages are not increasing (though with the mass retirement of baby boomers, this is to be somewhat […]

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