Nation’s acquire economic reputations over time. America has a reputation for path breaking innovation. Germany has a reputation for exquisite engineering and craftsmanship. Among other things, the Japanese have a reputation for high household savings rates, but that is no longer the case. As indicated by writer Jonathan Soble, Japan’s savings rate, long one of the loftiest in the world, is now less than zer0.
The savings rate in America, where consumers have a reputation for splurging, has been rising, hitting five point five percent in January. For decades, many Japanese hoarded cash, a practice that was embraced during the years after World War II when government protections like unemployment insurance and public pensions were rare. Today, roughly forty percent of unmarried adults are zero savers as are thirty percent of Japanese families according to the Central Council for Financial Services Information, a research group associated with Japan’s central bank.
A decade ago, the ratio for both groups was approximately ten percentage points lower. The Japanese household savings rate fell to minus one point three percent during the last fiscal year, adding another layer of complexity to Japan’s still troubled economic circumstances.
