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Japanese Q3 Growth Tumbles As Abenomics Cracks Following Slide In Consumption And Exports
Earlier today we reported that the Japanese cries of "more QE" have not only started but are getting progressively louder, when after a massive initial surge in the first half of the year following an epic currency dilution, the Nikkei's performance since May has largely been one big dud, which is putting not only the psychological "wealth effect" at risk, but also is tearing Abenomics apart, since perhaps the only key variable for the Prime Minister's plan of "growth" is the constant increase in the stock market, much the same as in the US. But while the market has gone nowhere fast, it is the economy that is truly starting to crack at the seams, as was confirmed hours ago when Japan reported that in the third quarter its economy grew an annualized 1.9%, following a quarter when the GDP grew at more than double that pace or 4.3%, which in turn succeeded a quarter with 3.8% growth. What's worse, in nominal terms, the actual third quarter growth was a paltry 0.4%: the lowest in all of 2013 while actual nominal consumption plunged to the lowest level since just after the start of Abenomics.
Paradoxically, and certainly tied to the lack of gains in the market, and lack of losses for the Yen which has stabilized in the upper 90s range, the GDP losses were driven by the two core focal points of Abenomics: exports and consumption. The WSJ reports: "the two growth pillars lost much of their momentum in the reporting period, as exports fell 0.6% from the previous quarter while growth in personal consumption slowed to 0.1%. Exports gained 2.9% and consumption rose 0.6%, in the April-June window. Both figures were also revised Thursday."
Naturally, like every other Keynesian basket case, Japan was quick to place the blame elsewhere, in this case accusing "slowing growth overseas" as the main culrpit. "Japan's growth rate halved during the July to September period compared with the first half of this year, as falling demand from emerging markets as well as weaker consumption put the brakes on the economy's expansion."
It gets better:
"Weaker exports could become a major threat Mr. Abe's mission to haul the economy out of its 15-year-long deflationary malaise. Exports have been hit by decreased demand for cars from the U.S. while sales in emerging Asian economies have been hurt by financial market speculation over the Federal Reserve's plans to downsize its asset-buying program. "
In other words, it was all the US' fault that Abenomics is now failing. Where it wasn't the US fault, is in showing the way that when all else fails, only government funded "growth" is the only answer: "Government-funded public works helped prop up the third-quarter growth. Public works spending rose 6.5% from the previous three-month period, mostly as a part of the government's ¥10.3 trillion stimulus package earlier this year. Ahead of the tax increase, Mr. Abe is compiling another package worth ¥5 trillion."
Some however saw through the triple: Goldman cautioned that “exports have failed to grow in volume despite expectations they would rise with a time lag following a weakening yen, suggesting there may be a structural problem hurting exporters’ competitiveness and exporting capability." Well, since the primary beneficiary of a plunging yen is, at least on paper, the export industry, can one just call it a ballgame for Abenomics?
As for that key sticking point, and so far most undisputed failure of Abenomics by far, declining wages, well: they declined. Goldman says that employee compensations, a key focus of overseas investors, came in with a negative growth in both real and nominal terms for the first time in three quarters.
Amusingly, the weakness in consumption is thought to be short-lived: "Concerns over personal spending during the remainder of the fiscal year to the end of March are not so strong, as analysts expect last-minute demand ahead of Japan's sales tax increase to 8% from 5% in April to prop up consumer spending."
Remind us to look back at this post in 3 months when instead of the widely predicted economic spending Golden Age supposedly driven by even more taxation in the future, consumption instead craters as the population retrenches in anticipation of more upcoming hardship.
But then again economists, like all hacks, were never good at actually figuring out how common sense works.
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Abenomics, Big Ben, and the Gyros People are pumping Crypto to the moon.
OT --
http://tickerreport.com/banking-finance/62365/corrections-corp-of-americ...
providing value to stakeholders
http://investing.businessweek.com/research/stocks/people/board.asp?ticke...
I do not want to see Japan go down the drain either, but for very selfish reasons. Our No. 4 supplier of bearings is in Japan. His small company makes stuff we could not otherwise get (pieces for Toyota...).
More QE for Japan, me thinks.
Kyle Bass seems to have been ahead of the curve on this:
http://www.planbeconomics.com/2013/05/kyle-bass-thinks-japan-will-expand...
funny japan is up 3% on that news.
Your forget that which is on the other side of the world is upside down from our perspective so what is bad is good. The toilet still flushes clockwise though, same as the Japanese economy.
DCRB- look on the bright side. You still have suppliers 1, 2 and 3!
Japan is done. Stick a fork in them already. They'll print till the cows come home, but it doesn't change the fact they are a tiny island nation with few natural resources and a declining population (and no military to fight a war except what we provide them, and our capacity to do is is delicning rapidly as well).
They're the JC Penney of countries. Maybe they survive, maybe they don't. Doesn't matter. They're irrelevant from here forward except for the debt they drag with them and how it affects those who own that debt.
You raise a good point (perhaps not the one you intended to raise) -- if Japan's population is declining, perhaps any GDP growth is a good result. Why is ZH dumping on Japan for a good result? If they can keep their economy the same size while the population shrinks by 25%, Abe will be a hero.
p.s. small countries can be plenty happy. See Switzerland, Singapore. Unhappiness seems to come more from trying to be too big.
sept they hold a tril of treas. hmmm, when they get desparate enuf-sell the piggy bank cash to avoid livin under da bridge...
Hilarious. Nikkei 225 is up. Nikkei.com has the following headline...
Nikkei Hits 3-Week High In Morning On Better-Than-Expected GDP
Oh well, as long as it was better than expected, that's all that matters.
Japan needs another war. How about one with China? It'll bring back fond memories of the "Rape of Nanking" for the Chinese.
Yeah, war will fix/destroy everything. It pulled the US out of the Great depression.
It will get Bernanke/Yellen and the 12 Fed PhD stooges off the hook.
A war with China will boost sales of adult diapers in Japan. That ought to count for something.
Interestingly, if you think about it, a war is the LAST thing the Japanese economy needs. You send what is left of iphone staring young men off to be slaughtered and that would bring forward the demographic collapse by a decade.
"...since perhaps the only key variable for the Prime Minister's plan of "growth" is the constant increase in the stock market, much the same as in the US."
It becomes all the more obvious that the administrations in the US and Japan do not know how to each "fix" their nation's economy. Central banks appear desperate for GDP growth to take hold whilst they pump the markets. What a brilliant strategy... of desperation...
FUBAR.
"a brilliant strategy... of desperation"
All the central banksters need is to take the US to war. It almost worked with Syria, although it seems Russia and China didn't wanted to play the same game as the west. Russia and China see this a golden opportunity the voids and decline in power for the west.
If John McCain were elected POTUS, I think he would have kicked up a skirmish (or two) by now.
You mean this John McCain? McCain is a coward who betrayed POW's and their families. His only talent is crashing planes.
McCain talks tough when he is behind a lectern. I do believe he would have pushed hard for military action (if not covertly authorized it) against Iran if he were POTUS.
Yeah, because it's other parents children. He should send that blond bimbo of a daughter off to the military. Maybe he'd be a little less inclined to go traipsing off to wage war.
Why do we have to keep rehashing economic statistics that show a slowing world economy. Everyone knows that everything is based on perception and confidence and this constant harping on facts is have a negative effect on those attitudes.
More stories of unicorns shitting skittles please.
Everyone is too dependent upon this ponzi for their survival. It ain't going to crash until something actually crashes it. Probably an African American swan or something. We aren't supposed to say "black" anymore, right?
you are not allowed to say african americans either, its extremely racist; the correct term is "youths", "teens" or "basketball americans"
1-800-FUCK-YOSHIMA
Madness, but they keep going. Meantime the cronies (pension funds) are buying up the USD/JPY, generally dumping USD everywhere else. Abe is ready to buyup large at the Friday JGB auction.
This is mad science by academic lunatics.
SUKI (tm), The New World Religion (tm) growth has been lagging as well. Guess the "motherfucking religion", a Japanese religion, hasn't been able to grow to more than "almost 3 million members" due to the slow growth in Japan.
What's Kruggy have to say about this? Oh right - Japan just needs a little more stimulus.... a little more QE... tomorrow all will be ok ... MOAR MOAR MOAR
Shocking that a country that's now spent 23 years bailing out its banks, recycling the same failed policies over and over all the while pretending that these are new ideas, is having trouble growing.
Shocking.
It is simple; for Abe's plan to weak the Yen must weaken substantially. Either the market does it, or Abe does it. Either way, it has to happen, or Japan is fucked.