Decades of economic stagnation have taken a toll on Japanese consumers, who went from being big spenders before the economic bubble burst in the 1990s to masters of thrift today.
For the government’s Abenomics program, a lot hinges on how much they spend, and how they respond to economic shocks.
Changes to how gross domestic product is measured that came out last week indicate consumers helped the economy more than thought during Prime Minister Shinzo Abe’s first year in office, and that the hit they took from a sales-tax hike in 2014 wasn’t quite as bad as initially thought.
This reappraisal, which reflects new accounting standards, also improves the overall look of GDP.
It also supports the view of the Bank of Japan, which had questioned whether statistics from the government were sometimes portraying the economy as bleaker than it really was.
The BOJ has been busy creating economic gauges of its own, including a consumption index that looks a touch brighter than consumption as seen in GDP before the changes last week.
The government needs to try harder to improve the accuracy of GDP data because it affects monetary and fiscal policy, said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo.
“It’s still true that the sales-tax hike had a negative impact on Japan’s economy, but the degree of negative impact was smaller than people had thought,” said Shinke said. “If GDP data showed these results at the beginning, it’s possible that the policies that the government took could have been different.”