Role of the Household Economy during an Economic Recovery

Transcription

1 Chapter Figure -- Contribution of Demand to Real Growth Rates in Past Economic Expansion Phases The spillover effect of corporate demand on household demand has weakened. (Year-on-year change in the contribution ratio; %) Consumption Capital investment Role of the Economy during an Economic Recovery Section Recovery Patterns of the Sector In the previous economic expansion phase, the recovery of household demand was weaker than that of corporate demand. Housing Exports th year th year th cycle (9 IV - ) th cycle (99 I - ) th cycle ( I - ) (Note) For example, the of the th cycle shows the year-on-year change in the contribution for the Q of 99. In the previous economic expansion phase, although income growth was weak, the propensity to consume remained solid. Innovation creates new demand and increases the propensity to consume. Figure -- Factors Contributing to Private Consumption in Past Economic Expansion Phases In the most recent economic cycle, the propensity to consume propped up consumption. (Year-on-year change in the contribution ratio; %) th cycle (9 IV - ) th cycle (99 I - ) Average propensity to consume Real disposable income th year th cycle ( I - ) th year Figure --9 Growth Items and Average Propensity to Consume () Average propensity to consume and the ratio of growth items Strong demand for growth items helps to increase the average propensity to consume. (%pt) - Point-basis change in the average propensity to consume - Ratio of the real consumption value of growth items to the total consumption (right scale) (Notes). Five-year moving average.. Growth items means items whose growth rate is higher by one standard deviation or more than the average growth rate.. Two-or-more-persons household. 8

2 Private consumption has been sluggish due to a slow increase in employee compensation. Figure -- Employee Compensation, Population Movements and Private Consumption () Real employee compensation () Rate of increase in the population A strong correlation exists between the rate of increase in There is no correlation between the rate of increase in private consumption and that in employee compensation. private consumption and that in the population. (Change in real consumption; %) (Change in real consumption; %) y =.9x +.7 (t value of x =.) R =. UK UK Italy - 8 (Change in real employee compensation; %) (Note) Average of -8 Private consumption growth tends to be slow in countries with a rapidly ageing population. The ratio of private consumption tends to be low in countries where government spending is high. Italy - (Change in the population; %) Figure -- Employee Compensation, Population Movements and Private Consumption () Proportion of the elderly population The higher the proportion of elderly in a country s population, the slower the rate of increase in its consumption. Figure --7 Factors that Increase the Ratio of Private Consumption () Government expenditures and private consumption s ratio accounted for by private consumption of the total domestic demand is at a medium level. (Change in real consumption; %) y = -.x +.78 (t value of x =-.78) R =. (Nominal consumption/nominal domestic demand; %) 7 UK Sweden UK Italy 8 8 (Average ratio of the elderly population; %) y = -.99x + 7. (t value of x = -. R =.8 (Note) Average of -8 (Note) Average of -8 Finland Norway Denmark (Nominal government expenditures/nominal domestic demand; %)

3 In an economic recovery phase, corporate income tends to be slow in spilling over to household income. Figure --8 Contribution from the Operating Surplus and Employee Compensation in Past Economic Expansion Phases income was slow in spilling over to household income. (Year-on-year change in the contribution ratio) % Employee compensation % % % % -% -% -% -% -% Operating surplus th cycle th cycle th cycle (9 IV - ) (99 I - ) ( I - ) (Note) The plunge in employee compensation in the of the th cycle is considered to be due partly to the introduction of a new social insurance scheme in April under which bonuses have come to be included in the covered earnings so that pension benefits are calculated based on the total earnings of the year. th year th year % % % -% -% -% -% Figure -- Labor Share in Past Economic Expansion Phases The share of labor was on a declining trend. (Change from previous year) Labor share in Q (right scale) Difference in the labor share from the previous year Labor share (right scale) (Note) Labor share = nominal employee compensation/nominal GDP Figure -- Time Difference Correlation between s Employment-Related Indices and Consumption () From Q through Q 9 hours are closely correlated with private consumption. (Correlation coefficient).8.. th cycle (9 IV - ) th cycle (99 I - ) th cycle ( I - ) Employee compensation is depressed by reduced hourly wages and working hours stemming chiefly from an increasing number of part-timers in non-manufacturing industries. Figure -- Factors Contributing to Real Employee Compensation in Past Economic Expansion Phases () All industries The number of employees did not grow substantially even when the economy was expanding. (Year-on-year change in the contribution ratio).% Real employee compensation Number of.8% employees.%.% I th year th year hours Number of employees % % % % %.%.% -.% -.% -.% Real hourly wages hours th year th year.. -. Fixed salary Taking the lead Real consumption Lagging behind (Quarters) th cycle (9 IV - ) th cycle (99 I - ) th cycle ( I - )

4 Section Issues Surrounding Private Consumption Elderly contribute to propping up private consumption. The impact of the collapse of Lehman Brothers on elderly has been comparatively limited. Figure -- Contribution to Changes in Private Consumption from s by the Age of the Head of the s whose head is aged or more contribute to propping up private consumption. (Year-on-year change in the contribution ratio; %) Total value of nominal spending s whose head is aged or more Figure -- Consumption Value per and the Number of s () Consumption value per household Since the collapse of Lehman Brothers, consumption by elderly has not decreased as much as that by other. (Year-on-year change; %) s whose head is aged or more s whose head is aged s whose head is aged or less s whose head is aged -9 SNA-based nominal private consumption I II III IV I II III IV I II III IV I II III IV I II III IV I Total value of nominal spending -8 (Quarter) Figure -- Average Propensity to Consume on the Basis of the System of National Accounts and the Family Income and Expenditure Survey The average propensity to consume on the basis of the SNA and Family Income and Expenditure Survey after conceptual adjustment has been on the rise non-working (after conceptual adjustment) SNA basis Figure -- Contribution to the Average Propensity to Consume from s by the Age of the Head of the Elderly have contributed to the rise in the average propensity to consume since around 99. (Average point-basis change; percentage points) + nonworking (after conceptual adjustment) s or more SNA basis (after conceptual adjustment) + non-working (Note) The major adjustment to the SNA-based data is the deduction of imputed rent, while that of the Family Income and Expenditure Survey-based data is the correction for underestimated spending on durable goods through the use of the Survey of Economy s Less s Non-working (about 9% of which have a head aged or more)

5 Of non-working elderly, those with a head who is of advanced age are able to spend without using savings. Figure -- Savings Levels and the Propensity to Consume of Non- Elderly s () Average propensity to consume () Disposable income With regard to whose head is aged 7 or more, the more they have saved, the more disposable income they can enjoy; however, their propensity to consume is around % regardless of their savings amount. (Ten thousand yen) Aged - Aged -9 Aged 7 or more Aged - Aged -9 Aged 7 or more I II III IV V Having larger savings (Savings quintile) I II III IV V (Savings quintile) (Notes). Although the amount of savings of each quantile varies by age bracket, the approximate amounts that mark the quantile boundaries are as follows: I-II, about million yen; II-III, about million yen; III-IV, about million yen; and IV-V, about 8 million yen.. Average of and onward. An increase in real disposable income is essential mainly for with children. Figure -- Marginal Propensity to Consume by Attribute () With or without children aged less than 8 Income is less linked to the marginal propensity to consume in with children s without children s with children I II III IV V (Annual income quintile) (Note) Estimates based on data for -9 Figure -- Education-related spending squeezes the core disposable income of the s and s age groups. (Ten thousand yen) Repayment of land and housing loans Disposable income Core Disposable Income by Age Bracket Essential spending Core disposable income (free-for-use disposable income) 9 or less s s s (Notes). Data for 9.. Core disposable income = disposable income essential spending repayment of land and housing loans. 7

6 Consumption by working elderly is greater than that by non-working elderly. Figure --9 Characteristics of and Non- Elderly s () Consumption expenditures Even if the difference in income and savings is discounted, spending by working elderly is higher than that of their non-working counterparts. (Ten thousand yen) (Notes). (a) applies to whose head is aged or over and (b) applies to whose head is in their s.. (a): averages of 7-9; and (b): results for 8 Figure -- Trends in the Hours and the Amount of Consumption () () Holiday consumption by working The more holidays a worker s household has, the more they spend. 8 Figure -- Attitudes of the Aged towards Work and their Reasons (International Comparison) () Reasons why the unemployed elderly do not want to work Compared with other developed countries, has a larger number of the aged who are not employed because there are no jobs suitable for their capacity. (Note) People in their s were surveyed. All data is as of, excluding that for Sweden, which is as of. Consumption by working increases in line with an increase in their leisure time (a) Breakdown of consumption expenditures per household (Trend in the amount of spending; %).9 Consumption expenditures excluding housingrelated spending, etc. Culture and recreation Education Clothing and footwear Heating, lighting and water charges Food. (b) Comparison of the amount of consumption expenditures under the same conditions of income, etc. Non-working Others. Non-office workers Difference in spending amount (about 7, yen) Transportation and communication Medical care Furniture and household utensils Housing. Culture and recreation-related spending Office workers (Notes). Estimated based on data for The figures indicate the rate of increase in the amount of spending when the number of holidays of the Golden Week Non-working -.7 Non-working whose head is aged or more 8 Because there are no jobs suitable for their capacity. Because there are other things they want to do. Sweden South Korea Figure -- Total Number of Paid Holidays Left Unused by Industry and by the Scale of the Enterprise () By industry (enterprises with employees or more) Rates of taking paid holidays vary significantly across industries. increases by one. (Note) The data is as of Other reasons Health-related reasons (Hundred million days) Grand total number of paid holidays left unused: million days per year Rates of taking paid holidays (right scale) Total number of paid holidays left unused Mining Construction Manufacturing Electricity, gas, etc. Information and communications Transportation Wholesale trade Retail trade Financial and insurance Real estate, etc. Restaurants and lodgings Education Medical, health care and welfare Other services 8 7

7 Section Issues Surrounding Housing Demand Due to the slowing rate of the increase in the number of, housing demand in terms of the number of houses is likely to remain weak over the medium to long term. Both existing house trades and renovation investments are stagnant in. Figure -- Potential Housing Demand from the Viewpoint of Population Movements () Housing demand Housing starts have been sluggish due to the decelerating rate of the increase in the number of. 9 (Ten thousand houses) <Upward trend in the house vacancy rate> Cases and : most recent years Cases and : most recent years <Reconstruction> Cases and : ratio of reconstruction to the stock for the one year before remaining unchanged Cases and : year-on-year change in the most recent years Increase in stock Reconstruction Figure -- Existing House Trades and House Renovation () New housing starts, etc. (international comparison) The number of existing houses traded is low in. (Ten thousand houses) 7 Ratio of the existing houses traded (right scale) New housing starts Number of existing houses traded Figure -- Existing House Trades and House Renovation Investments () Renovation investments (international comparison) Renovation investments are also low in Most recent years Ratio of renovation investments to housing investments (right scale) Housing investments as % of the GDP Case Case Case Case Renovation investments as % of the GDP UK (Note) Data for is as of 8, while for other countries it is as of UK (Note) Data for is as of 8, while for other countries it is as of. Figure --7 Scale of the House Renovation Market () Total annual spending value Demand in the house renovation market is mainly from the elderly. (Annual spending value; trillion yen) Aged or more Aged - Aged - Aged or less (Note) Spending value for all. 9

8 Together with household income and land prices, political measures and interest rate trends have a significant impact on house purchases. (DI, %pt) - Figure -- Factors Affecting House Purchases () Housing policies () Interest rate trends Housing policies as well as interest rate trends spurred housing investments mainly in the first half of s. Figure -- Trends in the Distribution of House Prices to Annual Income Levels () Proportion of whose head is in his/her s meeting certain levels of the annual income level The proportion of meeting the levels dropped. Custom-built houses Existing houses Houses built for sale (Survey year) (Survey year) (Notes). Each DI is calculated by deducting the proportion of respondents who were affected negatively from the proportion of respondents who were affected positively.. People who built, purchased or began to live in the house in the survey year are subject to the survey. fold fold fold (Notes). The ratio of the average price of a condominium in the Tokyo metropolitan area to the annual income of a household whose head is in their s.. In 8, the average annual income of people in their s was. million yen, while the average condominium price was 8 million yen. (DI, %pt) Figure -- Proportion of s Capable of Purchasing a House () Renovation capacity of the s and s age groups Renovation capacity in terms of savings has remained solid. 8 7 Existing houses Custom-built houses 's Houses built for sale A large number of young fail to meet certain levels of the house price to annual income ratio. However, the capacity of the elderly for house renovation investment continues to be solid. 's 7 9 (Notes). Of all whose head is in their s or s, the proportion accounted for by those with sufficient savings to pay for the average renovation contract value of. million yen or more.. In 9, the average savings of whose head is in their s each consisting of two persons or more and having their own house was million yen, while the corresponding figure for whose head is in their s was. million yen.

9 Figure -- Extent to which Additional Costs are Allowed with Long-Term High Quality Housing () Rate of responses according to the reason why additional costs are allowed The average cost increase that can be tolerated is around %. -% -% -% % over Incentives such as cost recovery are a key factor in promoting the spread of eco-friendly homes. % % % % 8% % If the house is livable for a longer period of time. If the asset value is raised. If house maintenance costs are reduced. Not allowed. (Note) Surveyed in January 9. Those who were planning to purchase houses are subject to the survey. Figure -- Energy-Efficient Single Family Homes and Apartment Buildings () Proportion of prefabricated housing units put on the market with an energy efficiency rating of Grade The development of energy-efficient apartment buildings lags behind that of energy-efficient single family homes. (Provision ratio; %) Single family homes Apartment buildings 7 8 (FY) (Note) The ratio of the number of housing units with an energy efficiency rating of Grade to the total number of housing units put on the market according to housing companies. A challenging task is to boost housing values through the accumulation of urban functions. Figure -- Population Density, Extent of Urbanization and Land Prices in Densely-Inhabited Districts () Population density of DID As the density progresses, the land prices in the area tend to rise. (Rate of increase in land prices; %) 8 y =.x - R =.7 (t value of x =.) Figure --7 Floor Area Ratio and Land Price (Tokyo wards) () Land price per unit of floor area In areas where the floor area ratio is high, the land price per unit of floor area is low. (Land price per unit of floor area; yen) 7,,, y = -.x + 7 R =.7 (t value of x = -.9) Designated cities under the Central City Invigoration Plan Other area,,, y =.x - R =.7 (t value of x = -9.) (Population density of DID (); persons/square km) (log scale) (Note) The rate of increase in 9 from, (Specified floor area ratio; %) (Notes). Data is as of 8.. Specified floor area ratio refers to the floor area ratio specified by the city plan.