New York Times Cites Me On How Weak Yen Hampers GDP and Consumption

GDP in 2024 Barely Higher Than 2018; Consumption Below 2018

In its report on the latest GDP figures, the New York Times quoted me on how the weak yen is hurting household consumption and, thus, GDP. To see the full New York Times piece, click this free link: https://www.nytimes.com/2025/02/16/business/japan-2024-gdp-yen.html

In 2024, real consumption fell a tiny bit (-0.1%), the main reason that overall GDP grew only 0.1% (see chart below). GDP is up only 0.5% from 2018 and household consumption is still down 1.6% from 2018.

Source: https://www.esri.cao.go.jp/jp/sna/data/data_list/sokuhou/files/2024/qe244/tables/gaku-jcy2441.csv

The Times quoted my explanation (among other of my comments): A weaker currency can help stimulate an economy if companies use the money they make from exports to increase hiring and salaries, and invest in their domestic capacity, Mr. Katz said. “In Japan, we’re seeing none of that trickledown,” he said. “On the contrary, consumers are just being squeezed by the higher import costs.”

People aren’t spending because their real income has been squeezed. Real wages have fallen in five of the last six years, including 2024 (see chart below).

Source: https://www.esri.cao.go.jp/jp/sna/data/data_list/sokuhou/files/2024/qe244/tables/gaku-jcy2441.csv

A big part of the reason is big price increases in food and energy due largely to the weak yen. See the discussion on import prices at https://richardkatz.substack.com/p/the-weak-yen-reflects-weak-japan

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