The Consumer Confidence Index expresses the "propensity to consume" in the following month, as a percentage score given by respondents on HILL's independent survey panel. Respondents are asked to rate their propensity to consume (i.e. their desire to buy products or use services) in the following month, taking 100 as the maximum propensity to consume. We have conducted these surveys every month since April 1993.

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Propensity to consume
for December 2002
55.9 points

This month's consumer confidence index stood at exactly the same level as last December with a score of 55.9 points (a 2.8-point rise over last month's 53.1). The index performed better than in 2001 during much of the latter half of the year, and fingers were crossed that with the surge in year-end demand December would replicate the pattern. But that's not how things turned out. Thus, while the percentage figure did rise over last month, in real terms it's been something of a disappointing finish to the year. The immediate reasons are predictable enough: belt-tightening prompted by alarm at the deteriorating financial climate as Japan's banks come to grips with their nonperforming loans, plus exasperation at the stubborn refusal of stock prices to emerge from the doldrums. But there are longer-term factors at work as well, like concerns about the looming US attack on Iraq, frustration at the lack of progress in resolving political issues with North Korea, plus a general mood of pessimism engendered by the confusion surrounding the government's highway policy reforms and the chaotic state of party politics.

Still, there's good news as well. The consumer confidence index for women soared to 60.9 points (a jump of 3.9 points over last month's 57.0). That's the first time it's climbed above the 60-point mark in 24 long months. Thus consumer confidence among women, it's fair to say, is back to where it was before the recession took a serious turn for the worse. But the index for men is in far more parlous condition: it came in at just 51.1 points, a paltry gain of 1.8 points over last month's 49.3. That number falls far short of last December's 54.0— which was bad enough as it was — suggesting that the trusty year-end bonus may have completely lost its impact. At any rate, the gap between the sexes has increased to 9.8 points, the widest on record.

This month, in order to bring the gender gap into sharper focus, we've added a graph of long-term changes in consumer confidence as seasonally adjusted based on a 12-month moving average. The index picked up during the latter half of the year after troughing in the summer, but what really stands out overall is the dramatic slump in confidence among males. Thus a contrasting pattern emerges: men constantly cowed by the political and economic crosswinds, women fed up with masculine doom and gloom and eager to start spending again.

Turning now to the consumer outlook for the end of the year, forecasts call for something of a boom in overseas vacations, especially to Asia, while compact digital cameras look poised to be the big seller on the home electronics market. In both cases women constitute the primary target. So we can confidently predict that women will continue to be the ones hauling the economy out of recession next year as well. Let's just pray that their shopping prowess proves infectious.

Propensity to consume
for November 2002
53.1 points

This month's consumer confidence index registered 53.1 points, virtually unchanged from last month's 53.4 (a 0.3-point drop). The index usually takes a jump in November and December thanks to year-end spending, but this year it dipped, even if only slightly. A poorer showing in November than October is something of a rarity: the last time that happened was eight years ago in 1994. But the fact is that October and November were virtually level last year as well (49.7 ->50.1). Evidently the lag in the "year-end effect" is becoming a regular phenomenon.

Last year consumer confidence rose dramatically in December, and hopes are high that this pattern will repeat itself. So far this year the index has consistently done better than last, and if it does indeed shoot up on cue, Japan may be in for its briskest year-end shopping season in years.

The numbers for the separate sexes were also pretty well even compared to last month (50.0 -> 49.3 for men, 56.9 -> 57.0 for women). It's interesting to note that for the past several months consumer confidence has remained stable in stark contrast to all the volatility on the macroeconomic front.

The following reasons can be cited for this month's results:

1. Just like last month, the survey took place as stock prices continued to plummet. It certainly wasn't the kind of situation where consumer confidence was going to surge ahead of other indicators, especially with workers nervous about their year-end bonuses. (That accounts for the delay in the year-end effect.)
2. On the other hand, there wasn't any really shocking news either, particularly as far as the economy was concerned. The Japanese public is all too used to recession, and there was no real reason for a serious plunge in consumer confidence. (That explains why the index remained stable despite macroeconomic trends.) This pattern has characterized women since the beginning of the year, and over the past few months it seems to have spread to men as well.

On the whole the consumer confidence index is barely managing to hold steady. Even so, this is the second worst showing for November since the survey began — only last November's score was lower — and a major shock could well knock the index back into a tailspin. We'll just have to wait and see.

Propensity to consume
for October 2002
53.4 points

This month's consumer confidence index remained virtually level at 53.4 points, up a mere 0.1 points over last month's figure of 53.3. The survey for October took place right in the middle of a plunge in stock prices, so the results were awaited with dread, but they turned out to be far better than feared. The tide has definitely begun to turn as far as consumer spending is concerned, even though macroeconomic indicators have failed to clearly register the upswing. Consumer confidence has improved markedly over the past year, especially when you consider that last October the situation was at rock bottom with the index languishing at 49.7 points. As we've been reporting over the past several months, the long-term trend bears a striking resemblance to the pattern for 1998. Hopefully consumer spending will surge as the year draws to a close.

Turning now to the individual sexes, the index for males dipped marginally to 50.0 points from last month's 50.6, while that for females inched up from 56.0 to 56.9. Men are thus back to the pattern we saw in 2000 at the very least, while women have returned to pre-1999 levels. If this trend holds out as the year-end shopping season gets into swing, the overall economy could enjoy a slight boost in the arm.

Why does consumer confidence remain largely unaffected by the dreary economic climate? The following factors come to mind.

1. Satisfaction with politics is up from 13.2% last month to 31.1% this month. This can be ascribed to the favorable mood engendered by recent developments in relations with North Korea. People hope that such progress on the political front will help Japan find a way out of its present bind, and that optimism has a positive impact on consumer confidence.
2. Many ordinary Japanese are starting to have doubts about how much roller-coastering stock prices and other macroeconomic indicators really affect their own lives. These numbers reflect the American business climate more so than that at home, so consumers are coming to realize that there's no point in getting all flustered about them.

It goes without saying that the Japanese economy is closely tied to that of the United States, and in reporting economic news the media certainly needs to focus first and foremost on that country. On the other hand, people on the street are beginning to tune their antennas to happenings elsewhere on the globe as well, like developments in Asia and relations with Europe. Next month's survey should show the impact of the awarding of the Nobel Prize to two Japanese scientists. Along with news from America, we'll need to keep a close eye on the shift in tide that Japan's own citizens are setting into motion themselves.

Propensity to consume
for September 2002
53.3 points

This month's consumer confidence index shot up to 53.3 points, a 1.1% gain over last month's 52.2. For the first time in thirteen months the index has put in a better showing than in the same month the year before (standing at 105.2% compared to last September), ending the streak of year-on-year declines that has continued since September 2001. The latest survey was conducted right in the midst of a plummet in stock prices, but the index stubbornly rose anyway. Plus September is usually a lackluster month, which makes the results even more out of the ordinary.
Two factors can be glimpsed behind the rise.

1. Greater satisfaction with politics. This indicator climbed to 13.2% from 8.3% last month, emerging above the 10% mark for the first time in the seven months since January. The reason: all's relatively quiet on the political front, partly thanks to the summer holidays.
2. A newfound enthusiasm for work. The percentage of respondents who cited "work" as their main focus in life for September was higher than in the two previous Septembers. (The figure was 51.6% in September 2000, 55.6% in September 2001, and 60.6% this month.) That number, by the way, is the highest ever recorded since the survey was launched in May 2000.

Let's now take a look at the individual sexes. Consumer confidence rose among men to 50.6 from 48.0 last month, while for women it slipped slightly from 56.7 to 56.0. An overall trend seems to be shaping up for the year, with the index for the males zigging up one month and zagging down the next while that for the females slowly but steadily inches up. Macroeconomic indicators and stock prices may still be a source of anxiety, but among ordinary Japanese a virtuous circle of work and consumption is beginning to evidence itself. People, it seems, have made up their minds to put the recession behind them one way or another.

Propensity to consume
for August 2002
52.2 points

The consumer confidence index for this month registered 52.2 points, down 1.4 points from last month's 53.6. Shoppers typically tighten their purse strings in August as the fall sets in, and this year has proven no exception. But the numbers for the two sexes diverge considerably. The index for men dipped to 48.0, a 2.8-point decline from last month's 50.8, as spending on summer recreation wound down and stock prices continued to plummet. The figure for women, by contrast, inched ahead to 56.7 points from last month's 56.5 -- a striking case of how impervious women can be to the impact of macroeconomic data like stock prices. And so, with the divide between the sexes now measuring a gaping 8.7 points, this summer has repeated the pattern we've gotten used to of late, where Japan's women seem to be doing all the spending. Consumer confidence among females is pretty well back to the high levels it attained in the past.

Overall trends for 2002 show a remarkable resemblance to the pattern for 1998, as we've described previously. There is as yet nothing to portend the kind of dramatic plunge in consumer confidence that struck last fall and in the spring of 2000. We'll just have to keep an eye on what happens next month and beyond.

Propensity to consume
for July 2002
53.6 points

This month's consumer confidence index shot up 2.8 points from last month's level (50.8) to 53.6, a new high for 2002. The primary reason behind the jump was a surge among men from 47.1 last month to 50.8 this time around. The index took a severe dip in June as Japanese fans shut themselves away to watch the World Cup, but now the excitement is over people are, it seems, turning to new pursuits. One heartening trend the likes of which we haven't seen lately: the figure for men remained unaffected by the incipient plunge in stock prices that coincided with the survey period (late June - early July). More and more consumers, perhaps, are beginning to sense that the economy has bottomed out, even though that fact may not be evident from the financial indicators, which tell a contradictory tale. The index showed a respectable rise among women as well, from 54.7 last month to 56.5 this month. The overall pattern bears a striking resemblance to what we observed in 1998. The numbers typically backslide somewhat in the fall, so let's keep our fingers crossed that the upward trend somehow holds out through the end of the year.

The consumer confidence index started its plunge into the abyss at the beginning of autumn 2000. In the two years since then the same ugly pattern has repeated itself: the figure nosedives between August and October as the second half of the year sets in. Hence the next couple of months leading into the fall should prove absolutely crucial. We'll just have to keep our eyes peeled.

Propensity to consume
for June 2002
50.8 points

The consumer confidence index for this month registered 50.8, a decline of 1.9 points from last month. That marks a slight pause in the upward trend we've been enjoying recently. Confidence typically dips in June anyway for seasonal reasons, so there's no need to worry about a slowdown just yet. Nonetheless, the figure for men took quite a plunge, from 49.9 in May to 47.1 this month, while that for women declined slightly from 55.7 to 54.7. The gap between the two sexes thus widened again, from 5.8 points last month to 7.6 points this month — a return to the pattern of the bad old days.
The latest survey was implemented right after the World Cup kicked off. In other countries that have hosted the event the economy has tended to pick up steam in the run-up to the big occasion, then cool off during the tournament itself. That's because people lavish money on leisure, household appliances and foodstuff in preparation for the excitement, but once the matches get under way they barricade themselves up and devote all their energies to cheering on the home team. Consumption therefore stagnates, and the sense of malaise that sets in after the party ends only worsens matters. Japan may well be going through exactly that cycle. Some countries have even plunged into serious recession following the conclusion of the World Cup. We'll just have to wait and see how the Japanese economy performs next month and beyond.
As part of the survey HILL also asks respondents how satisfied they are with life overall. Particularly noteworthy this month: level of satisfaction with the economy climbed to 10.1%, rising above the ten-point mark for the first time in ten months. Satisfaction with politics, by contrast, languished at 3.2%, the second worst showing on record (the worst being 3.1% in February 2001). How to interpret these contradictory figures? Maybe people are beginning to rely on themselves to find a path to a brighter future rather than tying their destinies to a ship of state that has lost its bearings. The important thing is to observe consumption trends with a cool head and not get carried away by every scrap of good or bad news.

Propensity to consume
for May 2002
52.7 points

The consumer confidence index rose again this month to 52.7. That's a 0.7 point increase over last month's 52.0. The recovery definitely seems to be firming up. The wave pattern that's been unfolding over the past few months is reminiscent of 1998 and 1999 -- at least it doesn't threaten a reprise of the abnormal zigzag experienced over the past two years. This year, 2002, might well turn out to mark the Japanese consumer's first hesitant steps into the post-recession era. Let's just keep our fingers crossed the numbers continue their upward trend right through to the peak days of summer.
As for the individual sexes, among men the recovery has been dramatic: the figure shot up to 49.9 from last month's 48.1. That's just a stone's throw away from the long-sought-after 50-point mark. By contrast women, who for the last little while have been the driving force behind the rise in consumer confidence, took a bit of breather this month: their score dipped to 55.7 from last month's 56.2. But over the past several months the index for females has pretty well recovered its normal level anyway, so even though the figure is down this time around, there's no real cause for concern.
The World Cup is right around the corner, and expectations are high that the excitement will give the Japanese male back some of his spunk and confidence. So go Japan go!

Propensity to consume
for April 2002
52.0 points

The consumer confidence index rose for the second month in a row in April.
While the index took a slight turn for the better last month, the gain was minimal. But this month's climb may fairly be described as a definite upward swing.
However, the urge to spend tends to jump as spring moves into summer anyway, and this month's rise is not particularly spectacular compared to a typical year.
So the jury is still out on whether the current glimmer of hope will translate into a solid recovery.
As for the individual sexes, the index was up for both men and women. The figure for women (56.2 points) is just about back to where it would be in a normal year. But while the number for men is slightly up at 48.1 points, that's still a historic low. We're certainly not out of the woods yet.
The most conspicuous change in the index of satisfaction with life in general, which HILL surveys at the same time, is the drop in satisfaction with politics to 4.6%. That's as abysmal as in the dying days of the previous government last year, when the figure languished at 4.6% in January, 1.5% February and 6.0% in March. Satisfaction with politics, which at one point soared to 74.5% (in May 2001, immediately after the birth of the present government), has thus backslid to where it was in the space of a year.
Satisfaction with the economy, at 6.1%, is likewise extremely low. Japan remains chronically unable shake off its structurally induced recession.

Propensity to consume
for March 2002
50.4 points

The consumer confidence index for this month inched up slightly from last month's record low of 49.5 points. Nonetheless, it still registered the fourth lowest level ever, a stark reminder that consumption remains in the doldrums.
But there was one glimmer of hope. Consumer confidence among women enjoyed a major recovery, surging ahead from last month's 51.7 points to 55.0.
With spring just around the corner, conversation is turning more and more to travel plans and the latest fashions. There are definite signs of an upturn among the female crowd.
The problem is the guys. Last month they registered 47.4 points, and the figure continued its drop this month, falling to 46.0, the second lowest level ever (the record low was 45.3 last October). In contrast to the ladies men are paring back their spending, spooked by rumors of a March crisis.
And so the gulf between the sexes has again widened considerably, to around 8.9 points — just about the biggest gap ever (last October's 9.0 points being the all-time record). That's a striking indicator of how much women these days dominate the consumer scene.
The economic cycle, it appears, is starting to bottom out, though gradually. Women are clearly the driving force behind these gains. It's just about time that men too stopped wallowing in psychological recession, pulled up their socks and started spending again.

Propensity to consume
for February 2002
49.5 points

Consumer confidence for February 2002 registered 49.5 points. That, unfortunately, is the lowest figure on record.
The previous low was 49.7 points, recorded in October last year. In other words, the index has reverted to its historic low now that the year-end surge in buying is over.
It is down 3.5 points from last month (53.0) and 3.1 points from the same month last year (52.6). Nothing seems to be able to stem the inexorable decline in consumer confidence.
The index was down for both men and women, which is unusual. Among men it slipped 3.3 points (from 50.7 last month to 47.4 this month). Among women it fell 3.6 points (from 55.3 last month to 51.7 this month). Notably, consumer confidence among women was at its lowest level since hitting a historic low of 51.3 in February 1998, the month a certain well-known bank went under. Maybe an event of similar caliber is looming this time around as well.
This month we attach a graph of long-term fluctuations in consumer confidence plotting the twelve-month moving average. It plainly shows how, after taking a sudden turn for the worse under the Mori government, consumption has stubbornly refused to pick up steam under the Koizumi regime. Also observe the twelve-month moving average for the separate sexes. Consumer confidence among men and women has clearly diverged over the past few years. The overall structure of consumption, perhaps, is undergoing a fundamental transformation, leisurely though it may be.

Propensity to consume
for January 2002
53.0 points

Propensity to consume for January 2002 was 53.0.
That unfortunately is the lowest score for January since the survey began.
In a typical year the index drops in January due to seasonal factors: the bonus is already in and the New Year's holidays are over. Therefore the decline from the previous month's level (55.9) is not in itself of concern. The worrying thing is that the figure is so low.
Next month is February, the slowest month of the year for consumer spending. Entering February at such a low level is a genuine cause for anxiety. Last February marked the beginning of a prolonged decline that turned 2001 into the worst year on record.
In terms of gender, the drop was, predictably, especially dramatic among men (54.0 last month -> 50.7 this month).
All the rumors of a banking crisis and what not have plunged the Japanese male into a psychological slump parallel to that in the economy.
Women by contrast registered only a slight dip (57.8 last month -> 55.3 this month). The female consumer looks set to remain the lifeline of the Japanese economy this year as well.
Women's propensity to consume is down only marginally compared to last January (56.2) -- testimony to their resilience in the teeth of recession.
There is certainly no shortage of encouraging news. The Olympics. The World Cup. The advent of new retail formats. The appearance of innovative technologies on the market. Let's just hope this year ushers in a fresh start for Japan.

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