Current global economy
https://www.robeco.com/en-int/insights/2024/05/the-us-consumer-carries-the-world-on-its-shoulders
I read an article called: “The US consumer carries the world on its shoulders”
What do you think that means?
It means that American consumer’s spending can affect the global economy. Do you think Americans and Japanese spend money differently?
The article states that after the pandemic, the US is the only economy to grow significantly and “The mainstay of this growth has been the resilient US consumer supported by profligate government spending”
mainstay = constant thing (that always continues)
resilient = “ree-zih-lee-unt” tough, it won’t be affected by pressure OR it will recover quickly
profligate (-) = “prof-lih-git” wasteful
Japan’s total stimulus package was $900 billion (¥117 trillion).
117 trillion = 117,000,000,000,000
The US government paid $5 trillion in total to protect the economy:
total stimulus payments of $3,200 to each adult and $2,500 per child
$838 billion to companies if they didn’t fire employees (Japan’s stimulus package was
$80 billion to airlines to protect staff
$29 billion to restaurants
$69 billion to public transport services
Do you think the US spent too much money?
The main problem for many countries was companies that didn’t need the money applied for some support. The government didn’t have the resources to check what the money was being used for. Did this happen in Japan?
In May of 2022 the government was investigating 15,000 cases of people illegally receiving money.
They announced anyone who returned the money would not face penalties. Was this a good idea?
https://www3.nhk.or.jp/nhkworld/en/news/backstories/2016/
https://www.asahi.com/ajw/articles/14633332
https://mainichi.jp/english/articles/20220615/p2a/00m/0na/019000c
The article said: “Interest rates have risen dramatically to 7.55% but it only impacts a minority of consumers”
Why do you think this is?
Many property buyers choose a fixed interest rate. Anyone who bought a house 3 years ago might have a very low 3% interest rate and many rich people don’t need to borrow money to buy property
The writer says: “Fiscal largesse is likely to continue during the election cycle”
largesse (noun) = “lar-jess” = giving lots of money or gifts
Why?
Biden’s government will try to improve the economy as much as possible before the election to show everyone they (the Democrats) have been doing a good job.
US consumers are continuing to spend a lot of money because of
high consumer confidence (消費者態度指数 -しょうひしゃたいどしすう)
relatively high inflation
Why do these make people spend more?
People who think their jobs and business is stable or growing will continue to spend a lot
When inflation is high, people realize they should buy something now because it will be more expensive in the future … in Japan this happened before the sales tax rose.
During the Covid-19 pandemic more people started shopping online. Spending is 30% higher than pre-COVID levels. People will compare prices more and have less brand loyalty.
I bought these recently...
Do you think this happened in Japan?
Have you bought goods online from brands you don’t know?
The US has experienced an explosion of revenge spending on travel and services due to higher wages and low saving rates.
Do you think this happened in Japan?
Economic Data shows that many more Japanese were taking out short term loans for “revenge spending.” In general men borrow money from banks more often but post-pandemic women and young people have been borrowing a lot more.
One key reason is finance or loan apps make it easier to borrow money
At the end of 2023 domestic travel reached 96% of pre-pandemic levels