Consumer confidence at four-year low

Consumer confidence dropped to its lowest level in four years as falling wages and rising gasoline and food prices squeeze households.

Sentiment slid for a third month to 38 in December from 39.8 in November, the Cabinet Office said Friday in Tokyo. Confidence among consumers, whose spending accounts for more than half of the economy, hasn't been this low since 2003, when unemployment was close to a postwar high.

A consumption slump leaves companies from Toyota Motor Corp. to Matsushita Electric Industrial Co. more dependent on overseas demand just as the U.S. slowdown threatens to spill across Asia.

Record energy costs have hit Japanese consumers and their employers, darkening the outlook for pay increases and spending.

"It's easy to see why people are depressed," said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. "People think inflation is accelerating and wages aren't."

Expansion's sixth year

The economy is continuing to recover despite concerns about plunging stock markets and soaring prices for oil and commodities — factors likely to suppress growth, the government said in a monthly report Friday.

The report confirms that the nation's economic expansion has completed its sixth year, extending the longest period of growth in postwar Japan.

The January economic report maintains the headline phrase adopted in the previous month, saying, "The economy is recovering, while some weaknesses are seen." It underlines that the current expansion cycle in the country has stretched to 72 months.