People in the U.S. are afraid to spend money even after receiving the bailout, and restaurants are cold.
After receiving the relief money for the new pneumonia (Chinese communist virus), people in Japan and the United States are doing much the same thing, they are using it for savings or daily expenses, but not boosting consumer spending.
The latest data show that last year, the Japanese government issued relief money, did not drive consumption to heat up, the vast majority became savings.
Japan’s Ministry of Internal Affairs and Communications announced on the 11th, eligible people issued 100,000 yen ($ 918) bailout, in the last financial year ended in March, to raise inflationary disposable income of 4%, but the average monthly consumer spending over the same period was reduced by 4.7%, the largest reduction since 2014; the data fell 5.1% due to the government’s increase in consumption tax. Japan’s consumer spending contraction, mainly due to the government declared a state of emergency, as well as people home to avoid the epidemic.
Naohiko Maiba, chief Japan economist at Goldman Sachs, said the amount of savings by Japanese households surged by 36 trillion yen in 2020, accounting for nearly 7% of gross domestic production. He said, from the past habits of Japanese households, they can expect to spend part of their savings to raise the amount of consumption in the next two years 3.9 trillion yen.
A similar trend is emerging in the United States. According to a survey by Bankrate.com, American people who received $1,400 bailout checks, regardless of their income, used it to pay their bills instead of raising their spending.
According to the survey, 45% of Americans used the new round of relief money to pay their monthly bills, 36% used it to cover daily expenses, 32% wanted to use it to pay off debt, and 28% planned to increase the amount of savings. It is worth noting that only 13% of respondents intend to spend their relief money on non-essential activities and items.
The survey suggests that the behavior of the American public in taking care of their finances may have shifted as a result of the epidemic, just as the financial crisis has led Americans to be more conservative in their finances.
McBride, chief financial analyst at Bankrate.com, said, “Few things highlight the importance of emergency reserves and reducing debt burdens as much as the recession.”