We study Japanese household consumption at a disaggregated level focusing on the role
of income and asset dynamics. Stagnation of real per capita consumption is widespread
acrosslabor market groups, age groups and regions. Consumption-to-income ratios have
been mildly increasing due to the rising share of pensioners with significant assets.
Evidence therefore suggests that assets have become more important in financing
consumption. However, the short-term consumption dynamics remain quite sensitive to
income growth but not to asset market movements.