Survey: Faltering Economy Dismays Japanese Consumers
(EMAILWIRE.COM, April 21, 2001 ) Dismal economic conditions, political stalemate and revived concerns about the country's banking sector have sent consumer confidence into a free fall in the first quarter of 2001, according to the latest Prudential Japanese Consumer Confidence Survey. Prudential's Economic Expectation Indicator plummeted to 15 in March 2001, a level not seen since Prudential started tracking Japanese consumer confidence in January 1999. (See Chart One)
"Japanese consumers' hopes for a revitalized economy are diminishing amid political stalemate and market volatility in recent weeks, but they remain relatively calm as they feel their personal financial situation has not worsened," commented Michael Hines, senior vice president of Global Marketing Communications at Prudential. "It is a critical time for the new leadership in the government to show their determination in curing the country's economic ills and restore the public's faith in its economic policies," added Hines.
Other Notable Findings of the Latest Prudential Survey:
Consumers Fear Things Are Not Likely To Improve Any Time Soon
In March 2001, nearly one in three consumers (31 percent) expect the economy to get worse in the next six months, and another 63 percent expect it to remain in the current state. Only a mere 6 percent expect the economy to show improvement in the coming months.
The survey found that this economic outlook is shared by all demographic groups.
Weak Consumer Confidence Stifles Consumer Spending
With economic recovery nowhere in sight, consumers are likely to keep an even tighter leash on their spending. When asked how they would allocate an expected 1 million yen, the survey respondent would use two-thirds of the money to improve their financial situation. Less than a quarter of the windfall (22 percent) would be spent on buying things. (See Chart Two)
Consumers' aversion to spending money doesn't bode well for the economy, as consumer spending accounts for roughly two-thirds of the GDP.
Consumers Are Apprehensive Of The Weakening Corporate Sector, Especially Banks
The March survey showed that 38 percent of consumers think the Japanese corporate profits will be lower in the next six months, while very few consumers (7 percent) expect corporate profits to increase. (See Chart Three)
Consumers seem particularly concerned with the health of Japanese banks in the near future, given the escalating bad loan situation and nose-diving stock markets. Over half of consumers (51 percent) expect that the conditions at Japanese banks will further deteriorate, up sharply from 34 percent in November 2000.
Reactions To The Stormy Stock Market Is Relatively Subdued
Prudential's Stock Market Expectation Indicator declined to 41, its lowest level in over two years. However, the four-point drop between November 2000 and March 2001 is far gentler than the wild swings in the stock market, considering at one point in mid-March the Nikkei 225 Index was at a 16-year low. (See Chart Four)
Consumers' subdued reactions to the stock market fluctuations reflect both ordinary Japanese's lack of market exposure and some investors' belief that the market may have finally bottomed out.
As before, older, male, affluent investors tend to be more optimistic on the stock market. In fact, among investors, "bulls," i.e. those who expect stock market to increase, still outnumbered "bears," i.e. those who expect stock market to decline by a small margin (33 percent vs. 27 percent).
Consumers Feel Increasingly Frustrated With The Government's Economic Policies
Prudential's Government Confidence Indicator, dropped to 13, its lowest level to date. Forty-four percent admit to be "very concerned" with the government's resolve and ability to revive the economy, and 49 percent feel "somewhat concerned". (See Chart Five)
Household Financial Situation Has Been Spared Of Drastic Deterioration - So Far
Prudential's Household Financial Health Indicator, which tracks consumers' expectations of their overall household financial situation, is 34 in March 2001 and barely changed from November 2001's reading of 35. (See Chart Five)
Economic woes aside, most Japanese consumers have not felt the threat of losing their jobs, which provides the foundation of their economic life. The percentage of consumers who are "very concerned" about their jobs is just 11 percent, and has stayed in a narrow band between 11 and 17 percent for two years.
In fact, 15 percent of consumers even expect their household income to increase.
About the Prudential Japanese Consumer Confidence Survey
The Prudential Japanese Consumer Confidence Survey analyzes data on Japanese consumer opinions of various economic and personal financial situations. Interviews were conducted by Japan Statistics & Research (JSR). The sample is based on JSR's Access Panel while taking into account age/gender/regional requirement and weighed by income to replicate the random Japanese adult population. 1,300 households with annual income of ¥3 million or more are interviewed in each survey. The survey was conducted monthly from January 1999 to November 2000. Starting from March 2001, the survey will be conducted quarterly in the last month of each quarter. The sampling error is /- 2.7 percentage points. The latest release is also available on Prudential's Internet home page at www.prudential.com.
About Prudential
The Prudential Insurance Company of America, with more than $371 billion in assets under management as of December 31, 2000, is one of the largest life insurance companies in the United States and is among the largest financial services institutions in the world. Prudential serves millions of individual and institutional customers worldwide and offers a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, real estate brokerage franchising and relocation services.
------------------------
Produced for Prudential
CONTACT:
Michael Hanretta, Prudential
973-802-7373
Hideko Takee, IFC
81-3-5532-8921
------------------------
"Japanese consumers' hopes for a revitalized economy are diminishing amid political stalemate and market volatility in recent weeks, but they remain relatively calm as they feel their personal financial situation has not worsened," commented Michael Hines, senior vice president of Global Marketing Communications at Prudential. "It is a critical time for the new leadership in the government to show their determination in curing the country's economic ills and restore the public's faith in its economic policies," added Hines.
Other Notable Findings of the Latest Prudential Survey:
Consumers Fear Things Are Not Likely To Improve Any Time Soon
In March 2001, nearly one in three consumers (31 percent) expect the economy to get worse in the next six months, and another 63 percent expect it to remain in the current state. Only a mere 6 percent expect the economy to show improvement in the coming months.
The survey found that this economic outlook is shared by all demographic groups.
Weak Consumer Confidence Stifles Consumer Spending
With economic recovery nowhere in sight, consumers are likely to keep an even tighter leash on their spending. When asked how they would allocate an expected 1 million yen, the survey respondent would use two-thirds of the money to improve their financial situation. Less than a quarter of the windfall (22 percent) would be spent on buying things. (See Chart Two)
Consumers' aversion to spending money doesn't bode well for the economy, as consumer spending accounts for roughly two-thirds of the GDP.
Consumers Are Apprehensive Of The Weakening Corporate Sector, Especially Banks
The March survey showed that 38 percent of consumers think the Japanese corporate profits will be lower in the next six months, while very few consumers (7 percent) expect corporate profits to increase. (See Chart Three)
Consumers seem particularly concerned with the health of Japanese banks in the near future, given the escalating bad loan situation and nose-diving stock markets. Over half of consumers (51 percent) expect that the conditions at Japanese banks will further deteriorate, up sharply from 34 percent in November 2000.
Reactions To The Stormy Stock Market Is Relatively Subdued
Prudential's Stock Market Expectation Indicator declined to 41, its lowest level in over two years. However, the four-point drop between November 2000 and March 2001 is far gentler than the wild swings in the stock market, considering at one point in mid-March the Nikkei 225 Index was at a 16-year low. (See Chart Four)
Consumers' subdued reactions to the stock market fluctuations reflect both ordinary Japanese's lack of market exposure and some investors' belief that the market may have finally bottomed out.
As before, older, male, affluent investors tend to be more optimistic on the stock market. In fact, among investors, "bulls," i.e. those who expect stock market to increase, still outnumbered "bears," i.e. those who expect stock market to decline by a small margin (33 percent vs. 27 percent).
Consumers Feel Increasingly Frustrated With The Government's Economic Policies
Prudential's Government Confidence Indicator, dropped to 13, its lowest level to date. Forty-four percent admit to be "very concerned" with the government's resolve and ability to revive the economy, and 49 percent feel "somewhat concerned". (See Chart Five)
Household Financial Situation Has Been Spared Of Drastic Deterioration - So Far
Prudential's Household Financial Health Indicator, which tracks consumers' expectations of their overall household financial situation, is 34 in March 2001 and barely changed from November 2001's reading of 35. (See Chart Five)
Economic woes aside, most Japanese consumers have not felt the threat of losing their jobs, which provides the foundation of their economic life. The percentage of consumers who are "very concerned" about their jobs is just 11 percent, and has stayed in a narrow band between 11 and 17 percent for two years.
In fact, 15 percent of consumers even expect their household income to increase.
About the Prudential Japanese Consumer Confidence Survey
The Prudential Japanese Consumer Confidence Survey analyzes data on Japanese consumer opinions of various economic and personal financial situations. Interviews were conducted by Japan Statistics & Research (JSR). The sample is based on JSR's Access Panel while taking into account age/gender/regional requirement and weighed by income to replicate the random Japanese adult population. 1,300 households with annual income of ¥3 million or more are interviewed in each survey. The survey was conducted monthly from January 1999 to November 2000. Starting from March 2001, the survey will be conducted quarterly in the last month of each quarter. The sampling error is /- 2.7 percentage points. The latest release is also available on Prudential's Internet home page at www.prudential.com.
About Prudential
The Prudential Insurance Company of America, with more than $371 billion in assets under management as of December 31, 2000, is one of the largest life insurance companies in the United States and is among the largest financial services institutions in the world. Prudential serves millions of individual and institutional customers worldwide and offers a variety of products and services, including life insurance, property and casualty insurance, mutual funds, annuities, pension and retirement related services and administration, asset management, securities brokerage, real estate brokerage franchising and relocation services.
------------------------
Produced for Prudential
CONTACT:
Michael Hanretta, Prudential
973-802-7373
Hideko Takee, IFC
81-3-5532-8921
------------------------
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The Prudential Insurance Company of Amer
Joseph Nchor
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The Prudential Insurance Company of Amer
Joseph Nchor
Tel:
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
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