It's official....

Good morning everyone,

Yesterday was a gorgeous day, wasn't it? It was warm in the day without being too humid and mostly sunny. Today will be pretty much the same-it may be a tad cooler and a tad cloudier, but otherwise it's looking like a nice day too. Then the temperature will drop off and by Friday we'll see highs of around 25C and we may see some rain on the weekend...I hope not...

Well, the biggest non-news event of yesterday was PM Abe confirming the tax-increase for next April. The economy would had to have taken a huge nosedive in September to avoid the sales tax hike. From next April the sales tax will be 8% in Japan and then it is tentatively set to go up again in October of 2015 (not 2014 as some people believed) to 10%.

The data does show an economy that has continued to improve-unemployment is falling and businesses are more confident about the economy. Both indicators are back to pre-Lehman Shock levels.

However, the news wasn't all good. Despite the good news about job creation, the average income of workers fell for the second straight month. PM Abe has said that raising the wages of the working class is one of his priorities and I hope that he can be successful in his push to get big businesses to increase the salaries of their workers.

Unless people feel like their future prospects are improving, consumer confidence won't rise. It's great to hear that the economy is doing better and that large corporations are increasing their profits, but if we don't see some of those benefits trickle down to the working people, the economy will stall again.

Consumer spending drives the economy. It's the only reason that the American economy has been able to be so strong for so long.

Of course, like all things, it needs balance. The Lehman shock was caused by out-of-control consumer spending and people were in debt up to their eyeballs. In Japan, the opposite is true. We don't feel like the economy is going to improve, so we are very reluctant to spend our hard-earned savings or take on more debt.

If people can see their wages rising, then they are more likely to increase their spending and that will help the economy grow even more. Let's hope PM Abe can pull this off! If he can, his dream of seeing Japan crawl out of its decades-long period of stagflation may come true. If he can't, his weakening of the yen and increase in sales tax may all be for naught.

Good luck Mr. Abe...you're going to need it!

Have a great day!

PS Sorry about two 'heavy' topics in row...I promise tomorrow's blog will be about something lighter...

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