Economic boom without benefit
(From The Japan Times November 27 issue)

景気拡大に影を投げる低調の消費支出

    The biggest difference between the Izanagi boom and the current one is that the former occurred when Japan was growing rapidly to catch up with the economies of Western countries while the latter is taking place following the maturation of the Japanese economy. During the Izanagi boom, the economy grew at an annual average rate of 11.5 percent in real terms. By contrast, the average real growth rate of the current economic expansion is only 2.4 percent.

    The Cabinet Office's economic report for November, which Ms. Hiroko Ota, the state minister in charge of economic and fiscal policy, submitted at a meeting of Cabinet ministers, confirmed that the current expansion, which started in February 2002, has set a record for the longest period of uninterrupted growth. It stated that "corporate profits are improving and capital investment is increasing," thus showing that progressive growth in the corporate sector is the locomotive for the boom.

    Despite this desirable state, good corporate performances are not reflected in the income of workers and consequently in personal consumption, which accounts for slightly more than half of the nation's gross domestic product.

    For the first time since December 2004, the Cabinet Office's economic report revised the overall assessment of the economy downward. While the October report simply said, "The economy is recovering," the November report said, "The economy is recovering although weakness is seen in consumption." Elaborating a bit, it said, "Personal consumption is generally leveling off." Ms. Ota told reporters, "What I am worried about most is that household consumption growth has turned negative and that the per capita wage is not growing."

    According to the Statistics Bureau of the health and labor ministry, consumption by households with two or more members in September decreased by 5.2 percent nominally and 6 percent in real terms from a year before. The same statistics show that the real net income of working households in that month declined by 0.5 percent from a year before.

    Personal spending, which grew by 0.5 percent in the April-June period from the previous quarter, dipped by 0.7 percent in the July-September period. In the latest quarter, the economy grew by 0.5 percent in real terms from the previous quarter, translating into an annualized 2 percent growth. But only one-fifth of the growth came from personal consumption. Exports contributed to the remaining four-fifths.

    The government appears to be slightly cautious about the future prospect of the economy. For October, the Cabinet Office's report stated, "High performance in the corporate sector is spilling over into the household sector and it is expected that an economic recovery driven by domestic private demand will continue." This characterization was modified slightly for the November report: "High performance in the corporate sector is continuing and it is expected that this will spill over into the household sector and that an economic recovery driven by domestic private demand will continue."

    Still, optimism about corporate performances may not be warranted. A slowdown is expected in the U.S. economy, and the recent depreciation of the yen, which has helped exporters, may not last long. Growth in plant and equipment investment by corporations has been on the decline — a 3.7 percent growth in the January-March period from the previous quarter vs. a 3.5 percent in the April-June period and a 2.9 percent in the July-September period.

    Machinery orders, a leading indicator of plant and equipment investment, dropped by 11.1 percent in the July-September period from the previous quarter — the biggest drop since this statistic was started in 1987 — although 5.7 percent growth is predicted for the October-December quarter.

    The government and the Bank of Japan need to take utmost care to help the corporate sector avoid suffering a setback before the household sector can start enjoying a fair share of the fruit of the strong corporate performance of late. To help prolong the economic expansion, corporate executives need to pay more attention to how to spread the benefits of the recovery to workers. The government can also help by adopting long-range policies to promote technological innovation.

The Japan Times Weekly: December 2, 2006
(C) All rights reserved

    いざなぎ景気（平均年間実質成長率11.5%）と現在の景気拡大（2.4%）の最も大きな違いは、前者が高度成長期に、後者が経済の成熟期に起きたということだ。景気拡大の新記録は、内閣府が作成し、大田経済財政担当相が関係閣僚会議に提出した11月の月例経済報告で確認された。

    報告は「企業の収益は改善し、設備投資は増加している」として、企業部門が景気拡大を牽引していることを示している。 一方、報告は基調判断を「消費に弱さがみられるものの回復している」とし、10月の「回復している」という表現を、04年12月以来初めて下方修正した。厚労省統計局によれば、2人以上の世帯の家計消費は9月に、前年同期比で名目5.2%、実質6%減少した。また、勤労者世帯の実質所得は前年同期比0.5%減少した。

    第3四半期に、経済成長率は前期比プラス0.5%（年率2%）だったが、そのうち5分の1が個人消費、5分の4は輸出によるものだった。 企業収益について過度の期待はできない。米国経済に減速の兆しがあり、輸出産業の恵みになっている円安傾向は続かないだろう。設備投資は伸び悩み傾向を示しており、機械受注は第3四半期に、前期比11.1%減を記録した。

    政府・日銀は、国民が企業の増益の分配を受ける前に、企業活動が後退しないよう注意を払う必要がある。企業経営陣は、景気回復の成果を労働者に分配する方法についてさらに工夫し、政府は技術革新を推進する長期計画を導入すべきだ。