Ordinary Japanese yet to feel turnaround

Japan's economy appears to be slowly recovering - despite consumer

Kuniko Seiki has heard it all before.

Leaders here recently declared that the country's deep recession is nearing an end. Last month the Bank of Japan said that the economy "appears to have stopped deteriorating."

Mrs. Seiki thinks they've got it all wrong. "Things are definitely bad," snorts the Tokyo grandmother, "and I don't expect them to get better for quite a while."

Ask around in many Tokyo neighborhoods, and you'll find that business people, homemakers, and shop owners echo Seiki's rebuttal of the official optimism.

The government might be right about the economy, but what these people think matters. Consumer spending generates almost 60 percent of the Japanese economy, but if people don't feel confident, they won't spend.

As she shifts her slumbering grandson from one shoulder to the other, Seiki recounts how her carpenter husband's orders have fallen by half. "He's not working the way he used to," she says, small and stout in a sweater that matches her auburn hair. "We're just trying to get by as best we can. We're being very careful with money."

Above the narrow street where Seiki strolls with her daughter, a loudspeaker encourages shoppers to use $10 government cash coupons in stores. In an effort to boost spending, the government has distributed $5 billion worth of coupons throughout Japan.

Customers can use them at the nearby Makino Cotton Shop, but proprietor Ryuichi Makino doesn't think they're working the way the government hopes. "People are using the coupons for things they have to buy," he says, leaning against bolts of bright fabric and wearing black cords and Birkenstocks. "They're not buying things they don't need, so the coupons aren't bringing the economy up."

In 40 years of running the family shop, Mr. Makino has never seen business so bad. "The economy isn't getting better at all," he says, adding that he's not sure whether the government is doing the right thing. "We people at the bottom don't really know what's going on," he says, "and we don't really trust the government."

Last month, the government passed a budget that includes $169 billion in tax cuts and public-works projects.

Public-works spending is often criticized because much of it goes to the construction industry, which traditionally supports the ruling Liberal Democratic Party.

"I'm sure people in the construction industry think the economy is getting better," Makino says dryly. "But the rest of us aren't in that business."

Even the government's much vaunted tax cuts don't cut it with some people. "Taxes are still higher than they were five years ago," complains one shopper at a clothing store down the street.

Smartly dressed in a Kelly green jacket and black slacks, she's flipping through a sales rack. "I don't spend as much these days," she explains, "and we don't go on trips anymore. My husband's a banker, so I feel very close to what's happening in the economy. Things are very shaky these days."

She expects things to get better "in about 20 years."

Seiki isn't sure when the tide will turn. In the meantime, she worries that the government's attempts to spend its way out of the recession will leave the nation burdened with debt.

With Japan's declining birth rate, debt means higher taxes for fewer workers and a strained pension system.

"I'll receive my pension in August, so I think I'll be rescued," she says, patting her grandson, whose tiny blue and red jacket is emblazoned with the English words 'Glorious future, enjoy simplicity.'

"When these children grow up things might be harder though," she adds. "So far, we're taking it one day at a time."

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