Dear Tiana and/or Chris,
How, indeed? Total spending is, of course, the sum of a bunch of prices times a bunch of quantities. The prices here seem to be about twice or three times what we pay in the US, with some notable exceptions, so the quantities must average less than one-half or one-third. Notably, housing, having been described as suitable for rabbits, fits the low quantity description.Incidentally, here in Gifu, housing rents average considerably less than they do in my home state of Hawaii, although more than in most other US locations. Fish prices are also significantly less here than in Honolulu. Honolulu is no more representative of the vast areas of the US mainland than is New York City, but the comparison may add some perspective. This leaves us with the empirical question: do average Japanese families really consume quantities that are less than one-third of those consumed in the US? They definitely consume less, but a careful statistical analysis would be needed to verify such a hypothesis.
But that is only a small part of the issue. Total national saving is really the important variable. TNS is equal to the sum of personal saving (what I talked about above), business saving and government saving. Government saving is a notorious negative, although when you consider government as the sum of Washington plus 50 states and innumerable cities & counties, the negative is absolutely smaller. Business saving has been fairly strong in the US for the last 30 years. But Japan has been stronger in both of these areas. The government budget has averaged far closer to balance. Business saving, last time I saw figures, also was higher in Japan than the US.
But personal saving in the United States is the one that really took a dip.
Twenty-five years ago, Americans saved 7-10% of income. Twenty years ago and more recently, it had dropped to less than 5% Many blame the baby boomers. The logic is not all that bad. Young people have new households to set up, meaning lots of durable goods expenditures, purchased on credit (negative saving).
Twenty to thirty years ago, the baby boomers started to become young adults.
There were too many of them for the economy to handle smoothly, so excess labor supplies depressed wage and salary growth. Still, the increase in new households meant unusual demand for durables. Durables include automobiles and lots of electronic doodads nowadays, and guess who just happened to come along at about this time with gleaming new factories, impressive technology and automobiles, etc. priced just about right for young consumers whose salaries were below expectations.
Another issue is how the government accounts for its expenditures. Almost every other country distinguishes between government consumption and government investment. In fact, national income accounts usually sum private and government investment under one heading. That is taboo in the US. So, if the Defence Department buys a tank, it is a consumption good. If the Frence or Japanese government buys a tank it is an investment. That oversimplifies everything; I hope some economist who specializes in government budgets will clarify this issue better than I have.
Best regards.

Jim Marsh