Expecting Contraction in April-June; Test is July-September

posted by Richard Katz on May 16, 2014

Found in Japan, categorized in Growth Outlook and Business Cycle

Tags: GDP Japan

Report Cover


Japan’s GDP growth performed well over expectations in January-March, growing at an annualized rate of 5.9%, compared to a consensus forecast of 4.2%.


First quarter GDP rose at 5.9% annual rate, much better than forecast of 4.2%
Much of this was due to a spurt in consumer spending; it was up 2.1% from the quarter before (8.4% annualized), the same rate of growth as in Jan-March 1997
The biggest contributor to this was a 14% (not annualized) surge in spending on durables as consumers rushed to avoid tax hike
Even though spending on durables accounted for just 10% of all consumer spending in 2008, it has accounted for 76% of all spending since then
It has been aided by subsidies, and now by rush to avoid tax
This is not a sustainable pattern
Consumer spending has risen 20% since 1997 even though aggregate real income of all employees combined has not risen at all; how is this possible?
Partly it is because government social welfare spending on the elderly and others not adds up to 27% of all household disposable income, up from 16% in 1994
The other big reason is a plunge in the household savings rate from 11% in 1994 to just 1.3% in 2012 and a forecast 0.5% rate in 2015


About Richard Katz

Richard Katz is Senior Fellow at the Carnegie Council for Ethics In International Affairs, the New York correspondent for Weekly Toyo Keizai, a leading Japanese business magazine, and formerly the editor of The Oriental Economist Report, a monthly newsletter on Japan.

Mr. Katz has taught about Japan’s economy as an Adjunct Associate Professor at the New York University Stern School of Business, and as a Visiting Lecturer in Economics at the State University of New York (SUNY) at Stony Brook.

Mr. Katz is the author of two books on Japan's economic travails and has just finished a third book on reviving entrepreeurship in Japan.

Request a speaking engagement

Recent Reports

Recent Posts