In 1999, The Quarterly Journal of Economics devoted an entire issue to the subject of behavioral economics. This served as a powerful symbol to political and economic analysts from all over the world, that a need for a shift in focus was dire and sorely missed over the generations prior. The recent pulse on the streets of Tokyo echoes the spirit of behavioral economics and could prove a worthwhile study in business confidence and very well to behavioral science.

A Reuters poll has recently shown that Japanese manufacturers have grown less pessimistic about business conditions over the last month, thus adding to signs the world’s No. 2 economy has overcome the worst of recession as exports and output begin to rise.

The June results suggest the Bank of Japan’s tankan survey due to be released on the first of July could show a rebound from the record low hit in March, when the global financial crisis hammered global demand and led to a severe tightening of corporate funding.

This also plays down our blog’s focus on political risk and its dynamic correlation to the corporate sector. Here we have the prospect of a conglomerate rise in consumer confidence brought upon by their responding to the leeway given to corporations due to the recession, the excuse to restructure and prepare for the eventual upturn. Both macro- and micro-economic forces are aligning to help boost this recovery.

As this is merely one hypothesis and we tend to dabble in the value of political risk, I will state that this year’s parliamentary elections will no doubt be vital to the strength and sustainability of Japan’s future economic growth. Neither the ruling Liberal Democratic Party nor the opposition Democratic Party of Japan are perceived as pro-economic growth. Japanese businesspeople must continue to work to change their minds before the next recession hits.