One result of Mr. Shinzo Abe’s return to economic policymaking as prime minister is a huge upsurge in luxury goods sales. An official at Sogo and Seibu, the department store unit of retail giant Seven and I Holdings, said that sales of luxury goods have skyrocketed.
According to Sogo and Seibu, its Ikebukuro stores enjoyed a 30 pecent increase in the sales of luxury brand items compared with a year earlier. Sales in the first 20 days of February were up 90 percent from the same period last year. This increase is due in part to a recovery from the post-3/11 drop in domestic consumption, but it also shows that luxury-loving shoppers who can afford expensive items are no longer afraid to buy what they desire.
The Sogo and Seibu announcement noted that certain luxury goods were selling briskly this year. Sales of watches priced between ¥300,000 and ¥500,000 were strong in January and sales of watches priced ¥500,000 to ¥800,000 sold well in February. Foreign-brand clothes and goods sales surged 30 percent this year at Takashimaya stores, it was reported.
Economists who embrace trickle-down theory might consider the upsurge in spending on luxury goods a sign of economic recovery. But for the most part only the wealthy are loosening their purse strings, not the vast majority of citizens who have seen their incomes slashed during the two “lost decades” that followed the end of the bubble economy. The average income for company workers was ¥4.12 million in 2010 — an amount that would buy just five of the the most expensive watches that sold so well in February. The salary for female employees averaged even less at just ¥2.69 million a year.
Apparently, those people with high levels of disposable income are confident that the prime minister’s policies will continue to benefit them — or at least not cause them any harm. But the vast majority of workers who are struggling to make ends meet with low salaries and the many people who can’t find work in these times of relatively high unemployment do not share their confidence in the Abe government’s economic measures. Clearly these policies are not benefitting all members of society. The number of welfare recipients, for example, is higher than ever before.
The wealthy appear confident that things will continue to get better. But their optimism will not be shared by those less well off until company wages and bonuses return to pre-stagnation levels. Only when all segments of society begin to loosen their purse strings can the economy truly be said to be back on track.