In the intricate tapestry of global economies, the United States and Japan stand as economic behemoths, each exhibiting consumer patterns that defy conventional economic views. The juxtaposition of their consumer patterns reminds us that the dynamics of the marketplace are influenced by a myriad of cultural, economic, and societal factors and cannot be explained by simple textbook teachings.
  The United States and Japan are showing opposite monetary policies and consumer behaviors. The central bank of the United States, the Federal Reserve System (Fed), has raised interest rates to 5.5%, the highest level in more than 20 years. Interestingly, however, while interest rates in the United States are higher than ever, consumer spending is surging. As a result of this robust consumer spending, the United States GDP increased by 4.9% in the third quarter. Conversely, Japan has maintained near-zero interest rates, yet the Japanese are not spending. Due to high inflation, especially in food prices, the Japanese are reducing their consumption. It is not that Japanese households do not have money. In fact, households’ financial assets reached an all-time high due to the rise in stock prices and real estate. Then, how come both countries are showing unexpected consumption patterns?
  In the case of the United States, the COVID-19 pandemic had a significant impact. Although it was a challenging time, people received substantial financial aid from the government during this period. Monetary policies like cash assistance and tax relief gave people more money to spend. Additionally, the tragic loss of thousands of lives due to COVID alerted Americans to cherish the present and spend more before unforeseen events occur. For Japan, the period of deflation, the so-called “lost decades,” had a profound impact on their lifestyle. In a deflationary environment, saving more and spending less becomes a survival strategy as prices fall. Through the “lost decades,” the Japanese have learned to save more and spend less.
  The intricate tale of consumer dynamics in the United States and Japan unveils the current paradoxical narrative in economics. In the United States, an unforeseen surge in spending persists despite elevated interest rates. In contrast, Japan’s restrained consumption, despite minimal interest rates, reflects the lasting impact of deflationary epochs. These anomalies underscore the intricate interplay of historical legacies, societal norms, and contemporary challenges in shaping economic behaviors.