Noriko Yokoe strolls into an uptown restaurant only to find a familiar sight: two dozen other twenty...
Noriko Yokoe strolls into an uptown restaurant only to find a familiar sight: two dozen other twenty- somethings waiting for a table. The 26-year-old secretary collects her dining companions, slings her large Gucci bag over her shoulder and heads out into the night to find a lesser-travelled eatery.
Along the way, Yokoe squeezes into Prada Spa's crowded flagship store to spy the latest fashions. In no time, she settles on a pair of shoes and pulls out a charge card, unfazed by the ´44,000 ($358) price tag.
Walking the streets of Japan these days, one can't help but wonder where the recession is. The restaurants are packed. The shopping plazas are mobbed.
Men clothed in expensive suits order shots of 25-year-old single malt scotch and 30-year-old port wine. And everyone's chatting away on super-modern cellular phones. And just try to find a car that's more than three years old.
Ten years of flat economic growth and Tokyo's streets are flooded with shiny new ones.
It's all quite perplexing in a nation whose finances, in the words of its own finance minister, are "close to collapse". When there's a recession in the US, you know it. Department store parking lots are empty and so are trendy eateries. High-end clothing shops lose their customers to The Gap.
One finds few such signs in Japan, at least not in Tokyo. While most economies experience V-shaped or U-shaped recoveries, Japan's has been L-shaped. Growth plunged after the asset bubble burst a decade ago, stabilised and has more or less flat-lined since. It's almost as if the Japanese have grown used to recession and learned to live with it.
The nation's massive saving rate gives households a comfortable cushion. The Bank of Japan estimates households have upwards of ´1,380 trillion ($11.8 trillion) of savings. Also, the corporate sector has yet to pass its losses along to employees.
In the US, chief executives think nothing of firing up to 20% of their workforce to boost profits. In Japan, workers generally keep their jobs regardless of a company's bottom line.
The nation's unemployment rate, currently 4.9%, has never topped 5%.
Even with minimal growth in incomes, Japan's deflation means the inflation-adjusted purchasing power of the average consumer has actually increased dramatically during the last several years.
A continued slide in the Nikkei 225 stock average could dent household spending. Unlike in the US, however, individual ownership of equities, both directly and indirectly, is extremely small in Japan. Equities and mutual funds account for less than 10% of household-sector financial assets.
It's also hard to believe Japan is on the verge of economic crisis when sales of luxury goods are accelerating.
Today, Japanese consumers account for 45% of total global consumption of luxury goods. One wonders if the very lack of crisis is at the root of Japan's economic malaise.
Over the past 10 years, politicians have issued mountains of debt to stabilise the economy on the backs of future generations. Because most households are not feeling the pain directly, there is little pressure from below for change.
Many Japanese roll their eyes when they hear the US or other industrialised nations urging Tokyo to spend more savings. Problem is, many of the consumer markets may be saturated. Many of those who want a second car or a third television or a fourth camera or a fifth HŽrmes scarf already have them. What the outside world is suggesting is that Japanese consumers do what they've been doing shop. At the margin, one can sense some changes in Japan's commercial climate. There are more homeless people in plain sight. While the number is miniscule compared with, for example, the US, an estimated 5,700 in Tokyo, Tokyo's homeless population has almost doubled in the past five years.
Signs of growing social unrest also are being tracked by economists here. Some say the economy's problems are manifesting themselves in rising youth crime rates.
Others point to the rising number of suicides. At the same time, stress is on the rise because middle-aged Japanese are living amid uncertainty about whether the system of lifetime employment will survive.
Anecdotally, however, the real force behind Japan's economy is young, single women like Yokoe. Since she lives with her parents, Yokoe, and many women like her, has considerable disposable income.
And given Tokyo's lack of parks and public spaces, shopping is a popular form of recreation. "I'm not really thinking about the future," Yokoe explains. "Buying nice things for myself makes me feel good and helps me feel less bad about how hard I work five days a week."
William Pesek via the Bloomberg Tokyo newsroom
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From 6 April 2019