Recent Developments in Durable Goods Consumption: A Perspective from Spectrum Analysis

Private consumption has been resilient on the whole, although relatively weak developments have been seen for a prolonged time, ever since the consumption tax hike in April 2014. Various factors have been pointed out as attributable to such weakness. Among these factors, we focus on the effect of the temporary policy measures to promote purchasing environmentally friendly durable goods since 2009 and the consumption tax hike in 2014. This paper employs spectrum analysis for investigating the impact of replacement cycles for durable goods consumption. It is concluded that both medium-term cycles, including replacement cycles of digital appliances, and long-term cycles, including replacement cycles of passenger-cars and household appliances, exerted large adverse effects on durable goods consumption after the consumption tax hike in 2014. Looking at the period after 2016, however, the medium-term cycle is generating positive effects again, while the long-term cycle still works as the downward pressure on durable goods consumption. This analysis suggests that the downward pressure from replacement cycles of durable goods has started to decrease gradually.