Japanese Consumer Confidence Crumbling

by Julie Ray

More than three in four Japanese think economy is getting worse

WASHINGTON, D.C. -- The bad news keeps coming for Japan's economy: Japanese banks experienced their largest sell-off Tuesday since the 1987 "Black Monday" market crash, and the government reported late last week that the economy suffered its sharpest contraction in seven years in the second quarter. A recent Gallup Poll in Japan finds consumer confidence disintegrating during the same quarter, with more than three in four Japanese (77%) in June and July saying that economic conditions are getting worse.


Japanese consumers this summer were more pessimistic about the economic situation than they were in March, when two in three residents told Gallup that they thought economic conditions were getting worse. Household spending began to skid in March, and in the following months, Japanese households and companies continued to cut spending, and the economy shrank 3% in the second quarter.

Japanese appear to be starting to feel the pinch from slow wage growth and the rising fuel and food costs that have put a damper on their spending. The percentage of Japanese consumers who tell Gallup their standard of living is getting worse is now the highest it has been since 2005.


The Japanese are also likely mindful of a global economic downturn, particularly considering the economic concerns in the United States. Japanese consumers were less pessimistic about their economy than their U.S. counterparts were in the second quarter, but it's important to note that the that the gap between the percentage of Americans saying U.S. economic conditions are getting worse and the percentage of Japanese saying their economy is getting worse is continuing to narrow.


Volatility All Around

Japanese consumers exhibit little faith in their nation's economy and do not place much stock in the performance of their leadership either. Only 29% of Japanese surveyed in June and July, about two months before Prime Minister Yasuo Fukuda's sudden resignation on Sept. 1, said they approved of the country's leadership. Fukuda's departure marks the second leadership change in as many years for Japan, and the volatility could be contributing to citizens' ratings of their leadership.


When surveyed in August 2007, soon after the ruling Liberal Democratic Party (LDP) suffered a huge defeat in upper house elections and shortly before Prime Minister Shinzo Abe's resignation, 32% of Japanese said they approved of the country's leadership. This figure represented a huge loss in support for the LDP, in comparison with the 51% approval rating measured in 2005, near the end of former Prime Minister Junichiro Koizumi's five years in office.

Looking Ahead

Fukuda's surprise resignation two weeks ago forced the LDP to call an election for his replacement. The winner of Monday's election will likely become the country's next prime minister -- that is, until the next general election, which is expected to be called soon. The faltering economy, in tandem with Japanese citizens' displeasure with their country's leadership, will likely dominate the next prime minister's agenda, and could spell further trouble for the LDP in the general elections.

As their country teeters dangerously close to economic recession, Gallup Polls find many Japanese consumers increasingly fed up with the economic situation and unhappy with their leadership's performance. The next prime minister of Japan, whoever that may be, will face the daunting tasks of finding a way to reinvigorate one of the world's largest economies and restore citizens' confidence in their government.

Survey Methods

Results are based on telephone interviews with approximately 1,000 adults living in Japan, aged 15 and older, conducted in November 2005 and August 2007, and 750 adults in March 2008 and 750 adults in June-July 2008. For results based on the total samples of adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points for a sample of 750 and ±3 percentage points for samples of 1,000. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
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