Monday, February 23, 2009

Death Brings Relief in the Worst of Economic Downturns (and Other Ramblings)

It is only in the last week that the enormity of the fourth quarter decimation of the Japanese economy became clear and sent economic prognosticators running to their computer terminals to revise their 2009 forecasts downward; the Japanese economy is now going to fall three percent instead of two—if the average crystal ball is any indication. Of course most households, companies, governments can individually absorb a three-percent hit on their incomes with ease; the catch is that the blows will fall unevenly, with some folks going into negative-income territory, especially in the case of businesses. Thus, the stimulus bill/bills and the FY2009 budget will be at best a most clumsy means of easing the collective pain. And I don’t think we’re getting out of this until global consumption patterns re-coalesce.

Beyond that, I have little or nothing to say about the big picture; I’m not even an economist. However…

A look at the details will show us that some are less worse off than others, in fact, may be doing just fine. Take death. We all know that death can bring relief to the most miserable of lives, but did you know that it is uplifting an entire industry? In fact, the funeral industry was one of the few bright spots on Japan’s 2008 economic scene.

More broadly, during downturns, services as a whole tend to hold up better in Japan and it’s no different this time around according to METI statistics . Of the six business services for which 2008 data is available on a year-on-year basis, four actually increased sales in 2008. (Up: rentals; information services; credit card services; engineering. Down: leasing; advertising.) Of the thirteen personal services with year-on-year data, seven increased sales (Up: theaters, performances and theatrical companies; golf driving ranges; amusement and theme parks; funeral services; wedding ceremony halls; fitness clubs; supplementary tutorial schools. Down: movie theaters; golf courses; bowling alleys; pachinko parlors; foreign language schools; culture centers.), with funeral services among the winners. After all, if there’s one purchase that’s hard to put off until better times…. And more people are dying anyway, as Japanese society ages and the baby boomers begin taking leave. In fact, this is one industry where they can predict the size of your long-term, year-to-year market within a fairly narrow margin of error.

Looking beyond the funerals industry, there are several interesting inverse symmetries. One is between the decline in golf club revenue and the rise in driving range revenues. Japanese golfers are plaything less, but practicing more. It’s not hard to connect the dots here; I don’t think that Ryo Ishikawa has touched off a desire among golf dads to raise their own versions of the next Tiger Woods (or the less fortunate next Michelle Wie).

Another requires a look into the fine print. The METI table shows that the “credit card industry” as whole increased year-on-year business volume in 2008. However, most of this came in the dominant “sales credit” sector, while the “consumer credit” business (read: reformed loan sharks) continued a year-on-year decline. Cash-strapped consumers in Japan must be stretching out payments, instead of paying cash on the barrel as is the Japanese custom. Meanwhile, the shakeout appears to be continuing in the consumer credit business in the wake of the long-running judicial and legislative crackdown on usury.

Finally, rentals increased, but that did little to offset the much larger drop in leasing. It’s no surprise that businesses are more reluctant to take on long-term financial obligations.

On a different note, movies, bowling alleys and pachinko parlors continued their downward trend. I wonder if this noticeable drop in the cheaper amusement categories is an indication of the hit that the lower-income brackets are taking, or merely a point in the long-term timelines of entertainment industries whose best days are behind them.


Janne Morén said...

"..with funeral services among the winners. After all, if there’s one purchase that’s hard to put off until better times…. "

Now there's a business idea: cheap monthly freezer space rentals. Clean, understated design and subdued lighting, with space in front of each unit for mourners-in-waiting to give offers and put flowers.

Could put Uncle on hold until you've saved up for a good plot and a proper service; or maybe even wait until Auntie finally stops lingering and finally shuffles off the mortal coil so you can have a cost-effective double feature.

Me, ghoulish? Nah.

Jun Okumura said...

Janne: Real estate must be a real problem for urban Europeans. I remember seeing old, Catholic mausoleums that look more like stacks of file cases or Japanese “capsule” hotels. In Japan, we mostly solved that problem by switching to cremation. We all end up in the family plot. Greater geographical mobility and the loosening of family ties have created additional demand but you still wind up in the nuclear family plot. All this means, of course, that holding onto the remains until you’re financially ready to give a proper send-off will be much easier for us.

The ceremony can be quite a chore though…or ceremonies, since we have at a minimum the overnight mourning (where food and drink are served to the guests, some of whom can become quite boisterous) and the pre-cremation send-off. Moreover, we mostly heathens tend not to have churches or other places of regular worship that provide the venue and some of the professional services. In a Japanese Buddhist temple, every item on the menu has a price based on quantity and quality (for example, the length of the prayer and the rank of the monk who delivers it for the loved one).

Janne Morén said...

Cremation is actually more common than interment in Sweden nowadays. And spreading the ashes in a memorial grove or into the sea, rather than being put in a separate grave, is also quite popular. I guess it's the widespread atheism and agnosticism that's largely the cause. Old religiously motivated rules are not that important anymore. Also, I suspect that absent any organized religion, nature becomes an obvious stand-in.

But a couple of centuries ago people in northern Scandinavia really did sort of what I suggested. Digging a grave and setting a stone in deep-frozen ground was not something you'd do willingly, so it was not uncommon to simply store the body in the woodshed until spring. On a large farm, during a harsh winter or during an epidemic, you could have a stack of bodies waiting for the ground to thaw out.

Anonymous said...

Although the death of loved ones is a reason for sorrow, I, for one, lament the passing of bowling allies; shrines to the 1960s and better times when guys and gals were, well, guys and gals.

MTC said...

"Girls will be boys and boys will be girls
It's a mixed-up, muddled-up, shook-up world except for Lola..."

was recorded in 1970.

A long time ago.

Jun Okumura said...

Janne: Your analysis of the spread of cremation and related practices is intriguing. Certainly the scattering of ashes has a pantheistic, if not nature-worship, feel to it. There’s a book to be written here, if it hasn’t been already.

Now, “bowling alleys” and “guys and gals”, Anonymous? Obviously these, not these, sixties. And that song, MTC, is as good as any to serve as the bridge to the seventies.