u/ManyEqual3810

Prime Minister Takaichi's Carefree "Inflation Measures" X Post Brings Utter Embarrassment: Even with Three Quarters of Positive GDP, the Seriousness of Stagnant Personal Consumption. Although external demand boosted GDP figures, the underlying reality is quite bleak. Ironically, a sharp drop in imports of crude oil and other commodities—driven by the deteriorating situation in the Middle East—actually pushed up the GDP figures, as a decline in imports has a positive impact on GDP calculations. Private sector forecasts had previously projected an annualized growth rate of around 2.0%; however, the actual data fell far short of expectations, heightening uncertainty about the future.

Some people saw Japan’s real wages rise for a few months and acted like the problem was solved. May was up 1.4%. Five months of increases in a row. They treated it like the wage story was finally fixed. It’s not. For years Japan’s productivity kept rising while real wages stayed weak. Workers produced more. Companies got more efficient. But the average person’s buying power didn’t move with it. A short streak of better numbers after a long lag doesn’t erase that. Prices are still elevated. Rents in the big cities keep climbing. The weak yen is still making imports more expensive. Most households still feel the squeeze. A few green months look good in a headline. They don’t mean daily life suddenly got easier. The real issue was never one or two monthly reports. It was that productivity gains kept flowing more to the system than to the people living in it. A short recovery doesn’t close that gap.

Under the LDP, the current ruling party, Japan has seen wages flatlined, lifetime employment die and a third of the workforce shuffled into non-regular jobs with no security and lower pay. Meanwhile a weak yen and a PM Takaichi promoted tourism boom turned Kyoto into a theme park for people with stronger currencies, while the Japanese who actually live there watched their own money buy less every year. Nearly half of single-mother households live below the poverty line. Instead of explaining the shortcomings of its own governing record, the LDP shifted the blame onto the public.

PM Takaichi will own this temporary tax cut but it won't do much to win the hearts of voters. It will however make people quite angry when it is raised again: Japan's planned food tax cut faces consumer, retailer skepticism. The war in the Middle East gave the Takaichi Cabinet an off ramp for this tax cut. But they didn't think of a creative way to use it. Now I can only see the approval rating for the government falling further. It's an own goal.