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Japan May data show economy slowing but resilient

By WTOP Staff

ELAINE KURTENBACH
AP Business Writer

TOKYO (AP) — Japan’s economy is slowing following a sales tax hike but not as badly as some economists feared, according to two business surveys released Tuesday.

The central bank’s quarterly business confidence survey showed sentiment falling for the first time in 18 months in April-June. But the decline in the index, to 12 from 17 in March, was less than feared.

The index, which is a measure of the percentage of companies reporting positive conditions versus those reporting negative conditions, is expected to rise to 15 in September.

Demand has waned following a rush of purchasing to beat the tax hike. Automakers and retailers were the industries hardest hit by the April 1 increase in the sales tax to 8 percent from 5 percent.

Meanwhile a monthly manufacturing index by Markit Economics showed an improvement to 51.5 in June from 49.9 in May. A reading above 50 shows expansion in activity as seen by purchasing managers.

“The implementation of the sales tax in April looks to have had only a temporary effect on Japanese manufacturers,” said Amy Brownbill, an economist at Markit. But she noted that employment growth slowed for the first time since October.

Other data released earlier showed that housing starts and household spending fell in May while industrial output grew less than expected.

Japan’s economy was the one of the best performing in the industrial world in the first three months of the year, growing 6.7 percent from the year before. The tax hike is expected to cause a contraction in the economy for the April-June quarter.

Housing starts fell 15 percent in May from the year before, the government reported. Construction starts have slowed since hitting a peak in October last year.

Much of the growth in demand before the sales tax was raised was attributed to construction of new homes. Now, many lots that were cleared of older buildings last year remain idle due to the fall-off in construction. The tax increase is part of measures aimed at containing Japan’s vast public debt.

Household spending fell 8 percent in May, the sharpest drop in three years, following a surge in spending early in the year. The consumer price index climbed 3.4 percent, the fastest pace since the oil shock in 1982, as 10 percent higher rates for electricity and a hike in the sales tax pushed costs sharply higher.

Prime Minister Shinzo Abe has championed an economic strategy aimed at breaking Japan free of years of deflation. The theory is that companies and households will spend more now if they expect things to cost more in the future due to inflation.

Last week, Abe released the latest iteration of reforms he is proposing to help sustain growth and boost competitiveness, vowing to trim the country’s massive public debt and spur companies to spend more and diversify their employment practices.

But for most families struggling to get by on incomes that have been falling since 1997, wages must rise to increase or keep purchasing power constant. Despite some of the biggest wage increases in years for employees at some of the biggest companies, such as Toyota Motor Corp., income of salaried households dropped a real 4.6 percent from the year before in May, to an average 421,117 yen (about $4,160), the eighth straight monthly decline.

Similar to the “jobless recovery” in the U.S., Japan’s rebound so far has mostly boosted the hiring of temporary or contract workers, as rising prices and tax hikes eat into consumer purchasing power. Wage increases have been limited mostly to bonuses or to specific categories of workers, most of whom are contract or freelance employees in areas such as trucking and construction.

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You can follow Elaine Kurtenbach on Twitter at: http://www.twitter.com/ekurtenbach

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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