Abenomics At Work—–Real Wages Hit Lowest Level Since 1990

Prime Minister Shinzo Abe came to power vowing to drag Japan out of deflation and stagnation. His logic was that rising prices would drive higher salaries and increased consumption. More than two years on, prices are rising, but wages adjusted for inflation have sunk to the lowest since at least 1990.

A record 62 percent of Japanese households described their livelihoods as “hard” last year in a survey on incomes. A sales-tax increase in 2014 helped drive up living costs faster than wage gains.  At the same time, the Bank of Japan’s quantitative easing drove down the currency, boosting the cost of imported energy.

This is making fresh food and other daily necessities more expensive, according to Yuichi Kodama, an economist at Meiji Yasuda Life Insurance Co. in Tokyo.

The survey on livelihoods gave respondents three possible choices to describe their income situation: Hard, Normal or Comfortable. To rev up consumer spending, which is about 60 percent of the economy, more people will need to start feeling comfortable.



Originally appeared at: http://davidstockmanscontracorner.com/abenomics-at-work-real-wages-hit-lowest-level-since-1990/

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