The Wall Street Journal - A weak economy is keeping inflation from catching fire, but a recovery won't necessarily spark it, either.
The Bureau of Labor Statistics releases the March consumer-price index on Wednesday. Economists think CPI fell 0.1% and that "core" CPI, which excludes food and energy prices, rose 0.1%.
Such mild results belie the conflicting tectonic forces at work on prices. On the one hand are aggressive government spending and a busy Federal Reserve printing press. Both are designed to fight the recession, and both are raising inflation anxiety.
But the more powerful force is a deflationary one: The wide and growing gap between the economy's output and its potential, or what it would produce if it were making full use of its work force and production capacity. The excess supply of idle workers and drill presses means there is no kindling for an inflationary bonfire.http://online.wsj.com/article/SB123975395700718907.html
Showing posts with label GDP. Show all posts
Showing posts with label GDP. Show all posts
Wednesday, April 15, 2009
Saturday, February 21, 2009
When Consumers Cut Back: A Lesson From Japan
TOKYO — As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect.
The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.
Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
Japan eventually pulled itself out of the Lost Decade of the 1990s, thanks in part to a boom in exports to the United States and China. But even as the economy expanded, shell-shocked consumers refused to spend. Between 2001 and 2007, per-capita consumer spending rose only 0.2 percent.
Now, as exports dry up amid a worldwide collapse in demand, Japan’s economy is in free-fall because it cannot rely on domestic consumption to pick up the slack.
In the last three months of 2008, Japan’s economy shrank at an annualized rate of 12.7 percent, the sharpest decline since the oil shocks of the 1970s.http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html
The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.
Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.
Japan eventually pulled itself out of the Lost Decade of the 1990s, thanks in part to a boom in exports to the United States and China. But even as the economy expanded, shell-shocked consumers refused to spend. Between 2001 and 2007, per-capita consumer spending rose only 0.2 percent.
Now, as exports dry up amid a worldwide collapse in demand, Japan’s economy is in free-fall because it cannot rely on domestic consumption to pick up the slack.
In the last three months of 2008, Japan’s economy shrank at an annualized rate of 12.7 percent, the sharpest decline since the oil shocks of the 1970s.http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html
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