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The “flash” release of consumer prices in central Tokyo for November show Japan’s CPI is back in positive territory for the first time in 15 years, with accompanying headlines. Never mind that the current level is barely positive (and that for most of the period the level was barely negative); we’re told that Abenomics is working.
That judgement is premature. To date the rise in consumer prices is limited to energy (including the hike in electricity prices thanks to the nuclear shut-down) and imported goods (the weaker yen). While the overall index shows a 0.9% year-over-year rise, that falls to 0.2% once food and energy are excluded. Then there are import prices; TVs contributed 0.1 percentage points to the total, while overseas “package” vacations were up 12.6% in price. However, domestic services are the biggest part of consumption, and health care costs dropped 0.9% relative to November 2012. So in my reading the data provide no indication that the rise in consumer prices will continue after these one-time effects – the nuclear shutdown, the yen depreciation – work through the economy. [See here for the data.] (more…)
In the online NBR Japan Forum (and in a chat with a retired vice miniser of METI – the Japanese Ministry of Economy, Trade and Industry [経済産業省]) – I hear about how electronics, hybrids, and yes, fuel cell vehicles will turn around the [domestic] Japanese auto industry, including suppliers who can use their cumulative engineering and manufacturing skills to profit from this.
As evidence, they point to the Prius as a huge success, including as the top-selling vehicle in Japan.
This faith in new technologies as the industry’s salvation is wrong on three counts.
The conspiracy of Japanese wiring and electronics suppliers to put the screws to Toyota and other customers has now led to the largest antitrust action in history. What we know appears stupendous in scope. To date 20 suppliers have paid fines totaling $1.6 billion in the US (an additional $347 million in fines in Europe and Japan brings the total to $1.95 billion). Some 21 executives have pleaded guilty to felony antitrust charges including jail time and financial penalties. Wired participants, secret locations, coded communication and an expanding list of auto parts and firms, spanning 10 or more years and at least 4 continents. Wild!
…once customers have been screwed for a while, it starts to feel normal
Then there’s what we don’t know. To date all of those charged have pleaded guilty. As a result, the Department of Justice (and their counterparts in Japan, the EU, Canada, Mexico, Korea…
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Post by Mike Smitka
I’ve played with the latest yearbook of system of national accounts data for Japan, adding the 2011 data to an existing spreadsheet. Unfortunately the detailed System of National Accounts data aren’t published until roughly a year after then end of the fiscal year, so CY2011 are the latest.
…companies would rather sit on cash than invest…
For various reasons (particularly when data are chain-linked), past data are adjusted retroactively. [Pardon the oxymoron: all data are for the past!] All I did was plug in the latest, not go back to adjust for shifts in 2008-10. In any case, we don’t have a continuous time series, so it’s arbitrary how to link old series and new series – though we should be thankful that the statistical authorities continue to improve their data collection and accordingly the details of GDP calculations.
So the graph here is for now the best we can do, until the next data are released, probably in summer 2014. (more…)
A concurrent set of posts on the NBR Japan Forum is on the role of women in the labor force. At younger ages, the shift towards greater participation is dramatic, a 30 percentage point jump among 25-29 year olds. Participation for women age 30-34 is following in parallel, with about a 13 year lag:
However, this is less economically meaningful than at first glance. Women are not going to be able to save Japan from its demographic challenges. (more…)