Japan’s Confidence Falls and Stays Low

Japan’s confidence is still weak and in a down cycle. Since reaching a sharp peak early in 2024, confidence continues to recede. All components are showing decline on all horizons from 12-months to 6-months to 3-months. This is an extremely uniform response.

Consumer confidence has a 15-percentile standing on data back to 2004. Components of the confidence index has standing that range from a standing at the 47.8% mark for the valuation of assets to a low at the 6.1 percentile mark for willingness to purchase durable goods.

In keeping with this weakness, the overall livelihood standing is at its 10.2 percentile.

As desperate as these trends seem again the background of U.S. tariffs conditions would have looked even bleaker a few hours again. But the U.S. has made another turn in place and cut the reciprocal tariffs off, putting them on hold for 90 days. Tariffs will be imposed across the abord at 10% and the U.S. is engaging in discussion with at least 75 countries we are told that have approached the U.S. to negotiate.

Countries that did not bide-their-time and instead put tariffs on U.S. goods and services are being targeted. China will face tariffs of 125% for imposing high tariffs on U.S. goods.

While there are still tariffs imposed at a 10% level, this is a more rationale number and one that may affect trade and could boost prices somewhat but will not bring the economy to a standstill.

The outlook is still not clear. Uncertainty has been reduced a great deal, but not fully eliminated. Trump has once again revealed himself to be more of a brash negotiator who is willing to skate close to the edge than simply a loose cannon as some had asserted. It still a bold set of moves by Trump, but he is trying to bring real change into being in a short time. His short horizon is to produce improvement before the midterm elections. It’s a tall order and explains his extremism. The rest of the world is caught up in his tail winds.