Commentary Directory
- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- The End of Summer Sees the End of Disinflation in Europe
- Labor Market Indicators are Starting to Unify on Easing in Hiring
- Inflation and Tight Financial Conditions Weigh on the German Consumer
- Euro Area Money Supply Contracts for the First Time Since 2010
- Dismal Economic Data Out of Germany
- Core Durable Goods New Orders See Gentle Uptrend in July
- More UK Data Pointing to Q3 Decline
- Whispers of a UK Contraction in Q3
- Japan's Core Inflation Resumes Uptrend in July
- Early July Economic Data Leads to a Sharp Increase in Q3 Growth Expectations
- UK CPI: Energy Inflation Crashes but Services Inflation is Still Sticky
- China's Weak Start to Q3 Means More PBoC Easing
- A Breather for the Eurozone as Inflation Hits Two-Year Low
- Germany's September CPI Report: A Clearer Picture of Inflation Trends
- US Manufacturing Demonstrates Resilience Amidst Volatility in August
- The ECB Prepares to Address Excess Liquidity Through the MRR
- Bank of Japan is Too Optimistic on Inflation
- The Bank of England Pauses in a Near Split Decision
- UK Inflation August Update: A Precursor to the Bank of England's Announcement
- Housing Starts Tumble in August Amid Rising Mortgage Rates
- US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year
- US Consumer Prices Surge in August Driven by Energy Costs
- August NFIB Survey Showed a Tough Environment for Small Businesses
- All Signs Point to a Weaker Labor Market in August
- Chinese CPI Trying to Buck the Deflation Trend
- Energy Prices Rise but the Core Disinflationary Trend is Maintained in September
- PPI's Quiet Rise and the Energy Elephant in the Room
- Small Businesses Grapple with Inflation and Financial Strain in September
- A Wacky September Jobs Report Shows Strong Labor Market
- A Look at the Fragile US Labor Market Ahead of the Nonfarm Payrolls Report
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
Japanese Consumer Confidence Jumps to Highest Level in Over a Year
Jacob Hess
April 10, 2023
- Japan
- Consumers
Consumers are feeling a lot better in Japan after they ended last year with a sour economic perspective. Japan’s Economic and Social Research Institute reported that the consumer confidence index jumped 2.6 pts to 33.9 in March. This is the highest it has been in over a year after a dip in confidence was seen throughout 2022. The sub-indexes have all followed similar trends reaching near-term highs not seen since early 2022 and late 2021. The index tracking the overall livelihood of Japanese consumers increased 2.6 pts to 30.3, and the index tracking consumers’ willingness to buy durable goods jumped 3.2 pts to 26.4. Both the employment and income indexes saw comparable gains.

The consumer survey also asks about Japanese individuals' inflation expectations over the next year, an important measure for the Bank of Japan to track the development of one of the key drivers of actual inflation. The percentage of respondents expecting prices to “Go up” has been at all-time highs (survey data goes back to 2004) since February 2022 and remained in that territory in March where it fell just -0.2 ppts to 94.1%. The Bank of Japan does consider inflation good, but runaway inflation would be an undesirable effect of its exhaustive campaign to keep borrowing rates ultra-low. Consumers seem to think that there is a strong possibility of that as 61.1% of them responded that they expect year-ahead inflation to be 5% or more. This measure has been elevated ever since it jumped from 39.7% in February 2022 to 53.1% in March 2022. After a year, however, the measure is starting to ease as the 61.1% reported percentage is a -5.7 ppts decline from the all-time high set in February 2023.
These results are the first that the new Bank of Japan governor, Kazuo Ueda, will get to digest before he considers how to leave his mark on Japan’s monetary policy. For now, it seems that he will maintain the current state of things, but the recent developments in inflation should have him and his peers looking to normalize policy as soon as this year. A rebound in consumer confidence and the general Japanese economy will give the BoJ some support to make that decision to reduce some of its quantitative easing. The recent surge in inflation expectations will provide the impetus for making this decision sooner rather than later since a feedback loop can develop between expectations and actual price changes which make inflation harder to control.