Canon Inc. has experienced decline in stock market value and sales over the past couple of years. This has been a combined result of recovering economies and federal reserve and fiscal policy. The company is a Japanese company that operates heavily in the US and European nations including France. The federal reserve and fiscal policy in all of these countries has impacted the economic growth of Canon Inc. significantly.
Federal Reserve Policy
Federal reserve policy operates to “promote maximum employment, stable prices, and moderate long term interest rates” (“Monetary Policy”, n.d.). The Fed currently has two major initiatives which include maximizing employment and reducing inflation. Federal reserve policy impacts the market in general through its impact on the stock market. When interest rates are cut by the Fed, the stock market goes up. On the other hand, when interest rates increase, the stock market generally goes down. In January 2022 the federal reserve interest rate was 0.08% with an inflation rate of 7.5%. These rates have increased significantly since with the federal reserve interest rate being 1.68% and the inflation rate being 8.5% in July of 2022 (Statista, 2022). Canon Inc has experienced a drop in stock prices as the market is currently down .95% today (“Canon Inc. (CAJ) Stock Price & News”, n.d.). The company’s economic growth in the US has suffered in general as it has battled the impacts of high inflation and interest rates.
Fiscal Policies
Japan’s fiscal policy aims to achieve price stability above all else (The Bank of Japan, n.d.). Despite Japan's relatively low inflation rate, Canon Inc. Japan has experienced a decrease in stock prices with prices being down 1.31% today (Canon Inc (7751) Stock Price & News, n.d.). The fiscal policy implemented in Japan has not been significantly linked to any negative impact within specific markets (Dcallahan, 2022).
High taxes have resulted in lower disposable income for US consumers meaning that a market like the one that Canon Inc operates within has experienced lower sales. In general, when fiscal policy imposes higher taxes, individual consumers become more budget conscious. France follows the common monetary policy of the Eurozone set by the European Central Bank (ECB). France has one of the highest tax rates having a 45.4% tax to GDP ratio in 2020 (Bradbury, 2020). The company has experienced a decline in sales and stock value in both the US and France due to updated fiscal policy and high taxes.
References
Board of Governors of the Federal Reserve System. (n.d.). Retrieved from https://www.federalreserve.gov/monetarypolicy.htm
Bradbury, D. (2020). Revenue Statistics 2015 -France Tax burden over time. https://www.oecd.org/tax/revenue-statistics-france.pdf
Canon Inc (CAJ) Stock Price & News. (n.d.). Retrieved from https://www.google.com/finance/quote/CAJ:NYSE
Canon Inc (7751) Stock Price & News. (n.d.). Retrieved from
https://www.google.com/finance/quote/7751:TYO
Dcallahan. (2022, August 03). COVID-19 Fiscal Expansion and Inflation Expectations in Japan. Retrieved from https://www.frbsf.org/economic-research/publications/economic-letter/2022/august/covid-19-fiscal-expansion-and-inflation-expectations-in-japan/
Statista. (August 23, 2022). Inflation rate and Federal Reserve interest rate monthly in the United States from January 2018 to July 2022 [Graph]. In Statista. Retrieved October 01, 2022, from https://www-statista-com.ezproxy.regent.edu/statistics/1312060/us-inflation-rate-federal-reserve-interest-rate-monthly/
The Bank of Japan. (n.d.)
Retrieved from
https://www.boj.or.jp/en/mopo/outline/index.htm/
Bradbury, D. (2015). Revenue Statistics 2015 -France Tax burden over time. https://www.oecd.org/tax/revenue-statistics-france.pdf
Good Morning,
You had an extremely insightful post, and the mention of higher taxes that leads lower consumer spending is intriguing. Higher taxes as well as the increase in the prime rate all leads to decreased consumer spending. Fiscal policies like PPP loan and stimulus checks all lead to an inflation in the economy which is having negative effects in today's economy. The distribution of stimulus checks "shows that fiscal policy can be implemented rapidly with minimal transaction costs" (Gelman & Stephens, 2022). The stimulus checks is also a great example of how fiscal policy is implemented to help citizens boost the economy.
Reference:
Gelman, M., & Stephens, M., Jr. (2022, June 27). Lessons learned from Economic Impact Payments during COVID-19. Brookings. Retrieved October 2, 2022, from https://www.brookings.edu/essay/lessons-learned-from-economic-impact-payments-during-covid-19/