The Difference Between Theory And Practice

Theory: "Theoretically, there should be no impact from the consumption tax increase on corporate spending or long-term corporate planning," said Junko Nishioka, an economist at RBS Japan Securities in Tokyo.

Practice: "...but a large number of Japanese corporations seemed to see a large impact from the hike on final demand," as Capex collapsed 5.1%.

 

And so goes Japan...

Chart: Bloomberg

 

As we noted last night, and AP reports,

Japan's economy shrank more sharply in the second quarter than first estimated and the latest indicators suggest only a modest bounce back since then.

 

The world's third-largest economy contracted at an annualized rate of 7.1 percent in the April-June quarter, according to updated government figures Monday. The initial estimate released earlier this month said the economy contracted 6.8 percent. Business investment fell more than twice as much as first estimated.

 

...

 

The revised data Monday show business investment fell more than twice as much as estimated before, or 5.1 percent, while private residential spending sank 10.4 percent in annual terms.

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#Fail!

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