European roadsters aren’t the only products to have taken off lately in Japan. In recent months spending on everything from gourmet coffee to minivans, digital cameras and travel has tracked upward–suggesting that Japan’s long-hibernating consumers could be emerging from their dens at last. That would be great news for an economy that’s stagnated since the early 1990s; with consumption comprising about 55 percent of yearly economic activity, a sustained spending spree could mark the end of a devastating contraction that began when Japan’s real-estate and stock bubbles burst more than a decade ago.
Cautious optimism is spreading. Fresh data showing growth in both retail sales and household spending indicates that Japan’s expansion has broadened beyond export-oriented manufacturing and capital expenditures, the twin drivers of growth last year. Pretax profits at small and medium enterprises soared 37 percent in the last three months of 2003, according to new figures from the government. The Nikkei Stock Average now hovers near 11,500–up some 3,000 points since late 2002. Wages are rising in real terms and jobs are easier to find. “The environment for consumers looks to have improved,” says Masaaki Kanno, a vice president for JPMorgan Securities Asia in Tokyo. “A domestic-led recovery is possible.”
The tide hasn’t yet raised all boats, however. Sake, dry cleaning and manga comics, to name just a few products, have yet to experience an upsurge. But Debbie Howard, the newly elected president of the American Chamber of Commerce in Japan and founder of a Tokyo-based market-research firm, says spending has spread beyond the “pockets that defied the poor economy.” By that she means young women and the live-at-home “parasite” singles of both sexes–consumers who never stopped spending throughout Japan’s recession. Today, she says, new growth categories include young parents, elderly women and anyone interested in electronics. “Consumers now feel more confident, but there’s still a lot of pain here, too.”
A highly anticipated government real-estate report due out this week could ease things further. It is expected to show increases last year not only in central Tokyo–which ticked up slightly in 2002–but more broadly across the sprawling capital city as well as in select Osaka, Nagoya and Fukuoka neighborhoods. If so, Japan’s real-estate downturn may finally be over–with huge implications for the debt-laden construction industry, homeowners burdened by huge mortgages and the banks that financed them both.
Porsche, for its part, knows the Japanese economy is accelerating. Its sales there increased 24 percent last year, to 2,533 vehicles. Should Japan’s wallets and purse strings stay open, a sustained economic recovery could prove the most salient return of all. And that’s a luxury that has eluded the country for a long time.
