Corporate internal reserves reach record high of 600 trillion yen for 12th consecutive year – challenges in investment， labor costs， and utilization at end of fiscal 2023
According to the Corporate Enterprise Statistics Survey released by the Ministry of Finance on the 2nd, corporate “retained earnings”, which are corporate profits minus taxes and dividends, will be 600.9857 trillion yen at the end of fiscal 2023. This is the first time that it has exceeded 600 trillion yen. This marks the 12th consecutive year of record highs, boosted by strong corporate performance. On the other hand, growth in capital investment and labor costs has been small, and the utilization of accumulated internal reserves to bring about a virtuous cycle in the economy has become a challenge. Internal reserves for fiscal 2011 increased 8.3% from the previous year, the highest growth since fiscal 2017. This was due to operating profit exceeding 100 trillion yen for the first time, reaching a record high of 106.7694 trillion yen. Cash and deposits on hand also increased 2.3% to 301.8073 trillion yen, reaching 300 trillion yen for the first time. Since the Lehman Shock in 2008, companies have tended to slow down their investment in capital equipment and labor costs, and have begun to stockpile cash on hand in preparation for a recession. Internal reserves and cash and deposit balances have each roughly doubled compared to fiscal 2008. On the other hand, labor costs have remained at around 200 trillion yen since the mid-1990s. In fiscal 2011, it increased by 3.4% to approximately 221 trillion yen, marking the third consecutive year of growth, but the growth was limited compared to internal reserves. Capital investment also hit a record high for the first time in five years in fiscal 2011, but the increase was just under 5% compared to fiscal 2018. Regarding the ever-increasing internal reserves, a Finance Ministry official emphasized that “it is important to distribute them to workers as structural wage increases and create a virtuous cycle that leads to economic growth that also increases consumption and investment.” Yutaro Suzuki, an economist at Daiwa Securities, pointed out that according to statistics from the Bank of Japan and other sources, aggressive capital investment is planned for fiscal 2024. With an increasing number of companies implementing bold wage increases, he said, “We could consider using (accumulated) cash to raise wages,” expressing his hope for the use of increased internal reserves. Jiji Press, Economic Department, Published on September 3, 2024 at 7:22am.
Retained earnings are necessary for the microeconomic accounting of corporate management, so instead, the Japanese government, which is in charge of the macroeconomics, should cough up the unnecessary retained earnings such as foreign exchange gains.
It looks like prices are going to keep rising. Recently, they’ve started printing numbers after the decimal point on price tags. It’s already started. In Japan, rising prices will mean a lot of people can’t even afford to own a home. It’s going to be hell from now on.
If individuals and companies are hoarding money and not spending it, it’s no wonder the economy isn’t doing well. Of course, that’s because people don’t trust politics.
They could just buy their own stock, but if they continue with a system where only shareholders make profits, I think ordinary people will only suffer more and more. I wonder what America will do.
The LDP’s cost-push inflation is paid for by companies raising wages. In the end, all they need is for tax revenue to rise through inflation, and then they just have to fool the stupid public.
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