Courtesy of Mish.
Japanese citizens are starting to complain Abenomics is not helping them. Here are a few reasons:
- Prices in Japan are rising, but wages aren’t.
- Taxes have risen massively and Prime Minister Shinzo Abe wants even more tax hikes.
- Interest on savings accounts does not keep up with price increases
As a direct result of Abenomics, Japanese Households Without Savings Climb to Most Since ’63
The share of Japanese households with no financial assets rose to a record as falling incomes forced people to dig into their savings, highlighting the potential for widening disparities under Abenomics.
The proportion reached 31 percent, according to a Bank of Japan survey released in Tokyo yesterday, up from 26 percent a year earlier and the highest since the poll began in 1963.
Already facing declines in wages, households will be hit in April by a consumption-tax increase intended to shore up Japan’s finances.
“It’s critical that Abe succeed in convincing corporates to raise wages,” said Izumi Devalier, a Hong Kong-based economist at HSBC Holdings Plc. “Lower-income households may come to feel they’re getting the short end of the stick from Abenomics.”
Japan’s salaries extended the longest slide since 2010 in September, with regular wages excluding overtime and bonuses falling 0.3 percent from a year earlier, a 16th straight drop.
Tax Hike Deal
On August 31, I wrote Japan Seeks to Hike Taxes then Waste Money on Stimulus to Make Up for Decline in Spending; Currency Crisis Awaits
When Japan last hiked the sales tax from 3 percent to 5 percent in 1997, consumer spending tumbled by 13 percent in the quarter after the higher tax went into effect. That was followed by a recession.
In October, Abe got his tax hike. It’s the first tax increase since 1997. Sales taxes will rise from 5% to 8%, a tax rate increase of 60%.
To ease the blow of the tax hikes, Abe will announce a fiscal stimulus package in December.
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