BOJ Paper: Rise of Double-Income Families Behind Soft Spending

     TOKYO (MNI) - The increase in double-income families has been supporting

consumer spending in recent years but those families are also saving more, a

factor behind continued lackluster spending, a Bank of Japan research paper

released Monday said.

     Tight labor supplies in some sectors and the government's drive to make it

easier for women to join or return to the workforce after child-bearing have

contributed to the rise of double-income households, the BOJ Review said.

Concern about funding for retirement is also a reason, it said.

     Double-income households spend 10% more than single-income households,

particularly on eating out and mobile communications, while disposable income at

double-income families is 20% more than that for single-earner families, the

paper said. 

     This shows double-income families are saving more than necessary, a trend

unchanged at least in the past 17 years, during which time the economy has been

sluggish or recovering only at a modest pace, the paper found. It didn't provide

reasons but the BOJ suspects extra cash earned by the secondary income earner in

each household tends to have a part-time or non-regular job, less secure than

the full-time position the primary earner usually has.

     "The propensity to spend has been falling until recently since peaking in

2013," the BOJ Review said, referring to sluggish private consumption after

April 2013, when the sales tax was raised to the existing 8% from 5%, the first

hike in 17 years. The dampening effect of the tax hike was more serious and

lasted longer than BOJ and government officials had anticipated. 

     Many consumers bought needed durable goods before the tax hike went into

effect and replacement demand for those products has not clearly emerged yet,

leading to generally sluggish consumer spending, the BOJ explained.

     "In addition to durable goods replacement cycles, the increase in

double-income households is believed to have contributed to the recent

development" of weak consumer spending, the paper said.

     The paper didn't discuss other macro-economic factors behind slow spending,

such as the higher share of seniors in the households surveyed by the government

for household spending data. Seniors tend to spend less than consumers of

working age. 

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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