Japan Economy News:

 https://mainichi.jp/english/articles/20201208/p2g/00m/0bu/046000c

Japan's July-Sept. GDP growth upgraded to 22.9% as economy restarts

Article:

TOKYO (Kyodo) -- Japan's economy in the July-September period grew an annualized real 22.9 percent from the previous quarter, the government said Tuesday, upgrading the preliminary figure of 21.4 percent as the restart of economic activity following the coronavirus pandemic helped support consumption and investment.

The stronger-than-expected figure marked the fastest growth since comparable data became available in the April-June quarter of 1980, also affected by regular changes in the calculation method, according to the Cabinet Office.

Private-sector analysts had forecast that the preliminary data would remain almost unchanged.

Ideas:

The idea of 22.9 percent growth is good but it doesn't indicate the real story of the economy. Even in regular market economy, in normal times, GDP growth never shows the real story.

In a normal/regular market economy there are always positives and negatives even when there is positive economic growth, as some companies and industries are doing better than other companies and industries.

I don't like the use the words winners and losers but in a normal economy there those doing better than others.

So the idea of 22.9 percent growth sounds good, it doesn't tell the real story as the GDP doesn't show who is doing well and those who are not. It can only show the aggregate of the entire economy and not the overall positives and negatives in the economy.

Article:

Real GDP, the total value of goods and services produced in the country adjusted for inflation, rose for the first time in four quarters. The latest figure corresponds to a 5.3 percent expansion on a quarterly basis.

Private consumption, which accounts for more than half of Japan's GDP, soared 5.1 percent, revised upward from the 4.7 percent drop in the preliminary report released Nov. 16.

Capital expenditure dropped 2.4 percent, a tamer decrease than the earlier reported 3.4 percent fall.

Private housing investment was upgraded to a 5.8 percent decrease from a 7.9 percent drop, with an official citing the change in GDP calculation method, which comes about every five years.

Ideas:

Now we can see what different sectors are doing; These numbers/stats are not surprising considering how much the economy decreased the 2nd quarter.

But again while we can see some areas again we can't see all areas.

While consumer spending increase, which is good, again it never show exactly what the real number is. Not to be negative etc. but just thinking how much would consumer spending have increased if all consumers were OK. But we know there are many small businesses and consumers who were not OK in the 2nd and even 3rd quarter.

But any increase is very good. 

With capital spending we see businesses most likely were taking a wait and see approach and only spending/investing on old or outdated equipment, buildings etc. and not spending/investing on new equipment and projects.

Private housing investments like business investment most likely is a sign those who wanted to buy a new home were also taking and wait and see approach and also most likely worried about their jobs and the future and putting off buying a new home at this time.

Article:

GDP now reflects more accurately the value added by such activities as house renovations and vacation rentals, as well as the creation of films, books and music, according to the government.

The change also affected GDP figures in preceding years. For fiscal 2019, which ended in March, the economy shrank 0.3 percent, marking the first negative growth in five years on the consumption tax hike in October last year as well as fallouts from the U.S.-China trade conflict.

The government earlier said the economy slightly expanded last fiscal year.

Tuesday's data also showed that exports of goods and services leaped 7.0 percent in the July-September period, unchanged from the initial report. Imports fell 8.8 percent, upwardly revised from a 9.8 percent decrease.

Ideas:

GDP data and what is used in the calculation is always being re-tooled as different technologies and new kinds of products are being created and at the same time, always being re-tooled to provide a more accurate picture of an economy.

The idea that the economy expanded the previous year is an example of date always being revised and new data appears and again new ways of calculating the data.

Export growth of course was good, as consumers and businesses globally got back to the idea of spending as the 2nd quarter everyone was in period of shock as too what was going on related to the virus situation.

The idea of imports decreasing can be attributed to less consumer spending and or logistics challenges related to shipping imports to Japan, due to the virus situation disrupting all the logistics, shipping, and airline businesses.

Article:

"Some latest basic statistics showed that private consumption in September, especially in the entertainment and service industries, had better performances than expected, which affected the revision positively," the government official told reporters.

On prospects, analysts remain cautious amid the recent resurgence of coronavirus infections in Japan and abroad.

Atsushi Takeda, chief economist of the Itochu Research Institute, said the economy will level off in the current quarter and may shrink in the January-March period.

Ideas:

Perhaps in September, as in many places globally consumers were beginning to think that the virus situation was subsiding, and as such began to venture out to places they had shunned in the 2nd and somewhat in the 3rd quarters.

But at the same time there were the beginning signs of a new surge in the virus situation. And or consumers were just tired of waiting and wanted to get back to their normal activities even more so on September.

The idea of economy leveling off of course means it has regained some momentum but might not be able to grow in the 4th quarter like it did in the 3rd quarter at 22.9 percent.

The economy shrinking in the 1st quarter of 2021 is now is very realistic as this week, the first week in January, the Japanese government just introduced emergency measures which could reduce economic growth.

Article:

"Consumption has been stagnant since late November due to the spread of infections, and I believe it is in a downturn in December," he said.

The economy rebounded from the initial impact of the coronavirus pandemic, which forced Japan to declare a state of emergency in April and caused it to shrink an annualized 29.2 percent in the April-June period, possibly the worst contraction on record since 1955, the earliest point at which the government can track reference values.

The declaration was fully lifted in May.

Ideas:

Yes consumer spending most likely is back to being stagnant or not growing as before. Consumers become cautious when they see and hear all the negative news about the increase in the virus situation and also the continued worry about their jobs and the future.

With the new emergency measures announced on Jan. 8, consumer spending might continue to be stagnant, no growth, and actually begin to decrease like the 2nd quarter of 2020

Of course the Japanese government needs to step in again with even more stimulus packages and help those businesses and families are that are going to be hit even more by the emergency measures as business closer earlier and as consumer again decide not to go out and spend.

Article:

Japan's annualized real GDP totaled 527.14 trillion yen ($5 trillion), recovering from the previous quarter's 500.63 trillion yen but well below 545.72 trillion yen marked in the January-March period when fallouts from the pandemic had yet to materialize.

Nominal GDP, not adjusted for inflation, grew an annualized 23.9 percent, upgraded from a 22.7 percent expansion.

Ideas:

As usual we need to see things in the proper context. The Japanese economy is the 3rd largest economy in the world. Yes there was a large decrease from 545 trillion yen to 500 and even 527 trillion yen. 

But at the same time, both the 500 and 527 trillion yen is still relatively speaking a lot of economic/business activity. 

But we need to temper that with the idea, the drop in economic activity means there might have been a lot of lost economic activity that affected a lot of lives and a lot of businesses especially in the services and tourism industries.

So yes, we can say 500 and 527 trillion yen is a substantial amount of economic activity but at the same time there was a lot of lost economic activity and or the Japanese economy didn't operate at its true potential because of the virus situation.

But the bottom line is always people and businesses where people work. A loss of 45 trillion yen or 18 trillion yen is still huge because of the affect it might have had on businesses. workers, and families.

Have a nice day and be safe!