Savings Rate Still Going Down

[Mulboyne]

AFP: Once avid savers, Japanese saving less
Japanese households, once known for their fastidious saving habits, squirrelled away a record low proportion of their income in 2006, two-thirds less than a decade ago, officials said Wednesday. Japanese households saved only 3.2 percent of their disposable income in 2006, compared with 11.4 percent in 1997, according to government data. Figures for 2007 have not yet been announced. "Income levels have fallen in recent years. Also the aging population has pressured saving levels," said an official with the Cabinet Office, which published the data recently. "It is not yet clear how much impact the graying population is having on the overall saving rate. But the trend of a falling saving rate is certain to continue," he said. Japanese people once prided themselves as being among the world's most avid savers, with the household savings rate reaching as high as 23 percent in 1975. However, in recent years, babyboomers began to retire and started to spend their savings. Years of economic stagnation and deflation have also depressed salaries while Japan's super-low interest rates provide little incentive for people to store up cash in a bank account.

Consumption hasn't been a big engine for the economy in recent years and this data confirms that whatever spending has taken place has been largely the result of lower saving or people actually digging in to their existing savings.

[canman]

I really think a lot of people have to get the hell out of Tokyo and Nagoya and see the real Japan of 2008. Sure these are two megacities, that seem to be fairing well. But get out into the more rural areas, and you will see the devastation that has taken place because of failed economic policies of the former gov'ts. Huge projects that have never turned a profit, but left the community holding all the debt. Unemployment rates close to 15% for young people. Land prices dropping faster than Britanny Spears popularity. Its no joke. But unfortunately, all the economists only look as far as Tokyo. Well the last time I checked, the Tokyo area population counted for about a fifth of the entire population, so there are a lot of people out there who are really suffering with no end in sight.

[Greji]

I really think a lot of people have to get the hell out of Tokyo and Nagoya and see the real Japan of 2008.

There is nothing outside of Roppongi and Kabukicho worth seeing.

[Catoneinutica]

I really think a lot of people have to get the hell out of Tokyo and Nagoya and see the real Japan of 2008. Sure these are two megacities, that seem to be fairing well. But get out into the more rural areas, and you will see the devastation that has taken place because of failed economic policies of the former gov'ts. Huge projects that have never turned a profit, but left the community holding all the debt. Unemployment rates close to 15% for young people. Land prices dropping faster than Britanny Spears popularity. Its no joke. But unfortunately, all the economists only look as far as Tokyo. Well the last time I checked, the Tokyo area population counted for about a fifth of the entire population, so there are a lot of people out there who are really suffering with no end in sight.

William Stonehill, whose postings to the NBR Japan Forum offer some of the most interesting observations about Japan you'll find, takes a look beyond Tokyo and agrees with your assessment entirely:
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WTS writes : Japan's over concentration of population hides Japan's
population decline. Basically, I am taking two official studies as the
basis for my comments,one that predicts Japan's population to fall to 80
million by 2050 and the other that predicts that by 2020 several
prefectures in the Tohoku will lose 30% of their population and 50% of their
population will be over 65 years old.

Let's look at this another way. If the first prediction is true, then in the
next 42 years, Japan will lose 47,000,000 people. In other words, Japan will
lose 1,119,048 people a year based on the premise that Japan's current
population is a bit over 127,000,000.

This is a very serious lose of population, and I would not dismiss using the
word "catastrophic" to characterize it. 1,119,048 people is roughly the size
of Kawasaki. What if you got up one morning and found that every single
person in Kawasaki had vanished from the face of the earth? This is
essentially the (hypothetical) population lose Japan is facing.

However, we have a shorter term train wreck staring ourselves in the face,
and that is the depopulation of the northern part of Honshu by 2020. I
would, at this point call this a catastrophe about to happen without pulling
any punches.

If Yamagata or Aomori loses 30% of their population by 2020, and of the
remainder 50% is older than 65, what is going to happen to the tax base and
the infrastructure of these prefectures? These will be a terrible burden on
the rest of Japan.

Both of these predictions are hedged about with many "ifs" "ands" as well as
"buts". Neither of them are carved into stone, and many changes can happen
between now and then, but.....this is as clear a picture as we can construct
of the very near future at this point.

The Tohoku is not composed of high tech savants who telecommute to their
jobs. Other than the factories that are built there to take advantage of the
cheap labor, their main industries are agriculture, mining and extractive.
Technology supplies only a very small fraction of answers to these
questions, and more of a sense of crisis in the Japanese government might
assure that they were given the serious policy considerations that they
deserve, which could turn a serious problem into a glowing opportunity.
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http://www.nbr.org/foraui/message.aspx?LID=5&vt=t&PID=31065&MID=31071