BOJ sits tight as industrial output, wages falter

But increasing purchasing power is key to spurring enough demand

Here's a way to increase purchasing power: make sure that people's savings and income maintain their value.

Unfortunately for the non-connected, non-1% public, Abe is committed to doing the exact opposite.

Yep! I've been saying all along! Abenomics is just smoke and mirrors built on 50 year old policies and mindset and is destined to fail. They want people to spend more so the tax hike means something, but have failed to introduce any legislation for corporations who received tax cuts to increase salaries. As a result, people are spending less. Fail! They are also procrastinating over the TPP, which would flood the market with cheaper imported foods, thus increasing spending even further. Japan's economy will never recover until these old fools give up on their old ways and come up with new and innovative strategies to get more money in people's pockets. Corporate tax cuts mean nothing if they cannot sell their produce!

So where is the list of corporations that refused to raise their employees wages?

" “The upshot is that if consumers want to maintain their current living standards they will need to continue running down their savings,” Thieliant said in a commentary."

That's an "upshot"? Up the wazoo?

Abegeddon is just beginning.

1 in 10 workers get a 2000 Yen a month wage increase. And they are surprised no one is spending money??? Do the math. I, for one, have been seriously considering my purchases more carefully since the tax increase. I'll tell you where corporate tax cut savings have been going. In my factory faster assembly lines are being installed so that 25 to 30% of the workforce can be laid off over the next year.

Be optimistic and keep chanting Abenomics mantra :(

Yes it is an upshot because Japanese are sitting on trillions of yen in savings. If they can get that into the domestic economy, it can be taxed and help bring down the debt. Problem is nobody trust the future of Japan and wont spend. I am curious as to what Japans solution will be in 2050 when 1 in 3 are over 65. The third arrow of immigration reform? Perhaps it will be just a bunch of oyajis telling immigrants from Vietnam etc what to do.

5petals. Good point. It is mind-boggling that they do not see that logic.

5petals - You raised an interesting point with the immigration policies. Naoki Average will be broke, the corporations will all be filled with cheap immigrant labor and the rest of Japan will turn into a slum with no welfare and a failed pension system. The future of Japan is very bleak indeed, unless these fools wake up and get some money in,people's pockets. The rich and poor make up only 7% of the population. The majority of the population got the third arrow up the butt!

5petals, you think it's an upshot that people's life savings are being devalued? May I ask whose money is it that is in your bank account if not yours?

Up the wazoo, indeed JohnGalt.

Sales down more than 20%. Ouch.

Japan’s central bank kept its ultra-loose monetary policy unchanged in a policy meeting Wednesday, despite data suggesting the economic recovery is weaker than expected.

"Unchanged" in the current context means that the BOJ will continue to increase the monetary base "at an annual pace of about 60-70 trillion yen".

From the way the media reports it, it sounds like the BOJ is doing nothing, whereas the reality is the BOJ has the foot firmly on the accelerator (and there is no break pedal beside it).

"you think it's an upshot that people's life savings are being devalued?"

Yen savings are not being "devalued," thanks to deflation. The challenge is indeed to get more of people's savings into circulation so that it generates growth and thus tax revenue.

One way is to provide better social safety nets, as in northern Europe, so that consumers feel safe and don't need to worry so much about their funding their retirement by themselves. That is the main reason they're hoarding, and thus creating the domestic demand problem.

Abe-san keeps saying have no fear, everything is under control. Let's see ... how much longer will he be in control? Until he departs the scene, apparently we have much to fear as nothing is in control.

In the meantime, bye-bye much hard-earned yen ...

You mean Abenomics isn't working and won't in the future?? OMG!! I am SHOCKED!!!

Gee, my taxes have gone up but has my salary? Nope. My husband's did by a very small sum and it certainly isn't anywhere near enough to cover the 3% tax increase. And what is the pubic doing? Nada.

Next!

JeffLee,

According to the government figures and comments here at JT, there is inflation now, not deflation. And I was under the impression you believe the government doesn't need tax revenues, since it can just have the BOJ create as much new money as required to fund itself. But I do agree that Japan needs growth and that would help the government to pay it's way... so never mind!

I see problems with your proposal of a northern-Europe style plan of hefty social safety nets in Japan.

One, this sort of policy wouldn't necessarily be met with a consistent response. All power to the northern European societies where folks seem to trust their politicians, but I believe a lot of Japanese people would feel less safe if the already deeply indebted Japanese government suddenly promised to give everyone riches in retirement. Lots of Japanese people already don't believe they are going to get a pension now, because the system as it is currently structured doesn't appear to make sense or be sustainable.

And two, unlike the northern-Europeans, Japanese people generally really don't like paying taxes.

" The challenge is indeed to get more of people's savings into circulation so that it generates growth and thus tax revenue."

By that you mean the challenge is to make people spend THEIR money which they want to save for THEIR future in order to put it in government coffers so that the politicians can redistribute it to whomever, right?

"I believe a lot of Japanese people would feel less safe if the already deeply indebted Japanese government suddenly promised to give everyone riches in retirement."

Yeah, could be, but that suspicion is a legacy and hangover from the past, when Japan's private sector was supposed to provide the safety nets. They have since reneged on that social compact, with the crumbling lifetime employment in the private sector. And so Japanese workers are now in a lose-lose situation: scant assistance from both their employers as well as the state!!!

"By that you mean the challenge is to make people spend THEIR money which they want to save for THEIR future in order to put it in government coffers so that the politicians can redistribute it to whomever, right?"

The Northern European model works. It works really, really well, in case you haven't noticed. Integral to this is well-funded and intelligently constructed social security systems. This meant that in the wake of 2008, consumers there -- among the world's richest and most healthiest -- never panicked and lost faith. They didn't need to, unlike their counterparts in the doomed free-market societies.

@ Jeff Lee,

Why not adopt a truly Laissez-faire capitalism system like HK where individual wealth is valued? japan is still stuck with a facist, statist elite who the herd must adhere to0 and follow. Most people live very conservative lives, with little choice in products or careers. As for the future of Japan, Im guessing there will be staged waves of immigrants, but they will be conformed to the likes of the oyaji in charge (there will be legions of oyaji by then) who will be sure and keep things the same as they are now. The only risk to their likings will be intermarriage, and we will see controls put on that. The future of Japan is interesting indeed.

The fallacy of Shinzo Abe's economic policies have arrived. Things will become more obvious and evident over the next few months. Time to forcefully resort to the Secrets Act?

This was all in the plan to put people into a welfare state. Even a 4 year old can understand less money in circulation means a failing economy. Either the politicians in Tokyo are bumbling idiots, thinking that because 8 is a higher number then 5 there for more tax revenue will come in OR they really just hate their citizen and want them impoverished.

BOJ sits tight as industrial output, wages falter

Translation:

Abenomics failed as expected.

To temporarily boost economy, monetary easing could make sense in a liberal and entrepreneurial society, which is not the case of Japan.

Tax incentives and cheap loans should be focus on companies, and especially small ones, that can demonstrate innovation investment, structural modernization and women support for career. By doing that you can expect some changes within 10+ years.

Big J-companies do not need more subsidizes. And both 1st and 2nd arrows are just plain and simple waste of money for tax payers (not for share-holders and EXEC of course).

Clear case of the old neighborhood ojiisan screwing Japan over with their anachronistic thinking. If this country has any future, it's by embracing immigration and social reforms...

Base wages fell 0.4% from a year earlier, though bigger bonus payments pushed cash earnings up 0.7% in March from a year earlier.

The amount of workers increased 1.2% of which there was a 1.0% increase in salaried workers hence the decrease in base wages.

基本給や家族手当などの所定内給与は24万656円と0.4％減った。一方、常用雇用者数は4595万5000人と1.0％増えた。このうち一般労働者は1.2％増加、パートタイム労働者の増加率（0.8％）を上回った。厚労省は「企業業績の回復を背景に勤続年数の短い正規雇用者が増え、所定内給与の平均額を押し下げた。雇用情勢は改善しつつある」とみている

http://www.nikkei.com/article/DGXNASFL280TU_Y4A420C1000000/

Japan’s largest trade union federation, Rengo, has negotiated an average base wage increase of almost 2,000 yen a month, the biggest increase in years. But the group represents only one-in-10 workers.

Wow, less than a $20.00 a month raise. Hope Abe has more arrows to shoot than this.

Wow, less than a $20.00 a month raise. Hope Abe has more arrows to shoot than this.

It's called "base up" or ”ベア” in which this is added as a base (doesn't go down). The said base will be used to also calculate the annual 定期昇給率 of average 2.0% increase. Coupled with the above 460K increase in salaried workers, this is a sharp contrast to what Japan was experiencing these last 10 years.

Coupled with the above 460K increase in salaried workers, this is a sharp contrast to what Japan was experiencing these last 10 years.

nigelboy -- so what? Of course there was an increase in salaried workers -- all the recent college grads. But how does that 1% increase in salaried workers, or an extra $20.00 a month for the union ones, translate into a turn-around for the economy? I think you are missing the forest because of the trees.

nigelboy -- so what? Of course there was an increase in salaried workers -- all the recent college grads. But how does that 1% increase in salaried workers, or an extra $20.00 a month for the union ones, translate into a turn-around for the economy? I think you are missing the forest because of the trees.

??? There are college grads each and every year and the increase is from the same month last year. Having said that, an increase in salaried workers of 1% is 460,000 additional salaried workers in the workforce. If it was the opposite, you be the first one crying "FAILURE".

CEO's can get up to 10% of the net profit and wage increases cut into that ....