Tuesday, February 16, 2016

Trouble in Japan

Some grim news out of Japan over the holiday weekend: While America is worried about an economy that grew by just 0.7 percent in he fourth quarter, the Japanese economy actually shrank over that same time frame.

Japanese gross domestic product contracted by an annualized 1.4 percent in the fourth quarter, bigger than a market forecast for a 1.2 percent decline, Japanese data showed on Monday. That followed a revised 1.3 percent increase in the previous quarter.

The culprit appears to be private spending. The data showed that private consumption, which makes up 60 percent of Japan's GDP, fell by 0.8 percent. Since Prime Minister Shinzo Abe took power three years ago, private consumption has shrunk by roughly 1.5 trillion yen, equal to $2.7 trillion.

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