No lunch in Ginza: Japan's scaled-back spending helps push economy to recession
By Chris Gallagher and Akiko Okamoto
TOKYO (Reuters) — To grasp the dynamics that bumped Japan into recession and off its perch as the world's third largest economy on Thursday, look no further than Risa Shinkawa's dining habits.
Unlike unionised workers at big manufacturers such as Toyota Motor (NYSE:TM), the 32-year-old aesthetician isn't expecting a pay rise anytime soon. Rather, her salary has been cut, a reflection of the squeeze on the services sector, especially at the smaller companies that employ some 70% of Japan's workforce.
She's duly cut back on discretionary spending, which on Thursday meant no buying lunch in Tokyo's upscale Ginza shopping district.
«My salary at work has gone down. So I've stopped going to buy clothes and eating out in order to save money,» Shinkawa said as she stood on a busy Ginza corner on an unseasonably warm afternoon, carrying a handbag but no telltale shopping bags.
Shinkawa's frugality, and that of millions of others, is a stark reminder of the economy's underlying fragility even as Japan is on the cusp of ending years of central bank stimulus.
Japanese consumers, used to years of flat prices, have been punished as the weak yen currency has driven up the cost of living, and everything from food to fuel.
Although consumer prices have risen substantially, consumer spending has not moved in tandem, said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute.
«It really reflects how weak the trend in spending is,» Kumano said of the data.
Economic output fell 0.4% on an annualised basis in the three months to December, official data showed, marking the second straight quarter of contraction and meeting the definition of a technical recession.
That put the nominal gross
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