A check on spending


The Japanese government has issued a stimulus package which will assign every over-18 citizen a 12,000 yen check, which they hope will be spent soon in order to break the 11 month spending fall. Unfortunately, such a measure will not create the stimulus that the government hopes for.  

12,000 yen is equal to roughly £87, so the people of Japan aren’t exactly winning the lottery here. Will this be a major determinant of going on a trip or making a big retail purchase? Probably not. Most likely, it will get people to go out for a nice dinner on a night when they typically wouldn’t have or keep younger people at the bar for a few more hours one weekend, but Japan most likely will not see a major difference in spending. 

For a country that has had a spending slump for the past year they are probably better off cutting taxes rather than giving out a measly stimulus check. At least a tax reduction could have a lasting impact on a consumer’s mindset, even if it is only temporary.

Unfortunately, this will not be the end of tiny stimulus moves by the Japanese government. They plan on pumping 2 trillion yen back into the economy at a gradual rate. Hopefully they'll come up with a better plan, or they will suffer another lost decade.