Wage Growth and Consumption Dynamics - Japan's wage growth reached its highest level in 33 years during the 2024 spring labor negotiations, yet consumption recovery lags behind income growth[1] - Approximately 70% of respondents indicated they would increase consumption if their income rises, highlighting the importance of sustained wage growth over one-time bonuses[2] - Despite rising wages, about 40% of households expect their income to remain unchanged over the next five years, reflecting a lack of confidence in future income growth[2] Consumer Behavior and Inflation Expectations - High inflation has suppressed consumer confidence, with many households feeling that price increases outpace wage growth, particularly in essential goods like food[2] - Nearly 20% of respondents expect prices to rise by over 20% in the coming year, with around 50% anticipating increases of more than 10%[2] - The perception of rising prices is negatively correlated with consumer sentiment, leading to increased savings behavior among households[3] Savings Trends and Future Uncertainty - The proportion of individuals feeling their savings are "completely insufficient" rose from 30.1% in 2019 to 35.8% in 2025, indicating growing financial anxiety[3] - The share of savings designated for retirement increased from 46.3% to 53.6%, while "no specific purpose" savings surged from 6.7% to 22.9%[3] - Households with a "precautionary savings" motive exhibit significantly higher savings rates, averaging about 1% more than those without such motives[3] Structural Issues in Consumption - The average consumption propensity has shown a long-term decline, particularly among dual-income households, which now make up about 40% of all households[1] - Factors contributing to the decline in consumption include rising homeownership rates, unstable income expectations, and increasing concerns about retirement[1] - The overall consumption trend remains below pre-pandemic levels, with structural issues in the labor market exacerbating the situation[1]

Core Viewpoint - The article emphasizes the need for "patient capital" to support early-stage, small, and innovative investments in the capital market, highlighting that the essence of patient capital lies in a higher risk appetite rather than merely long-term investment horizons [1][4][10]. Summary by Sections Patient Capital and Risk Preference - Patient capital is fundamentally characterized by a high risk preference, which is essential for supporting investments that are uncertain and have higher failure rates [4][10]. - The article argues that static and dynamic wealth effects are crucial sources of patient capital, with static wealth effects indicating that wealthier individuals typically have a higher risk appetite due to lower necessity for immediate consumption [4][20]. Static Wealth Effect - The static wealth effect suggests that as wealth accumulates, the marginal utility of wealth decreases, allowing wealthier individuals to take on more risk [20][24]. - Empirical studies indicate a positive correlation between income levels and risk preference, with higher income leading to lower risk aversion [25][26]. Dynamic Wealth Effect - The dynamic wealth effect highlights that the growth of patient capital is contingent upon the sustained prosperity of capital markets rather than the reverse [5][8]. - Historical data from the U.S. shows that longer investment horizons correlate with higher probabilities of positive returns, reinforcing the importance of a thriving stock market for attracting patient capital [5][6]. Role of Wealthy Individuals - Wealthy individuals are identified as a significant source of patient capital, as they can afford to invest in high-risk ventures without jeopardizing their financial stability [20][22]. - The article discusses the historical context of wealthy individuals funding early-stage ventures, illustrating their critical role in the development of the venture capital ecosystem [21][23]. Policy Recommendations - The article advocates for an expansionary redistribution policy, which includes central bank actions to support fiscal deficits and enhance the purchasing power of lower-income groups, thereby stimulating demand and economic growth [7][50]. - It suggests that combining estate taxes with donation incentives can effectively channel funds from wealthy individuals into patient capital, avoiding capital outflows [8][51]. Challenges and Considerations - The article notes that the current negative GDP deflator indicates a confluence of short, medium, and long-term demand deficiencies, necessitating policy interventions to address these issues [7][39]. - It emphasizes the importance of maintaining a favorable economic environment to support the growth of patient capital and mitigate risks associated with inflation and supply constraints [50][52].