I don’t have much to say about these things. I just want them noted and available for reference when more news comes to light.
TOKYO (AP) — Japan’s economy shrank in the July-September quarter as domestic demand declined, sending the nation into a technical recession.
The numbers from the Cabinet Office on Monday showed that gross domestic product, the value of a nation’s goods and services, declined at an annualized pace of 0.8 percent in the third quarter, and contracted a seasonally adjusted 0.2 percent from the previous quarter.
That meant the world’s third-biggest economy slipped into a technical recession, defined as two straight quarters of contraction, because it had contracted in the second quarter as well.
The government showed in its preliminary GDP estimates that domestic demand fell 1.2 percent at an annual rate, as businesses held back on investments.
Japan has been slipping in and out of such periods of contractions, while eking out growth in between. Weak GDP numbers could prompt fresh government stimulus measures.
Prime Minister Shinzo Abe has repeatedly promised to wrest Japan out of the doldrums and show GDP can stay in positive territory, a challenge for an industrialized economy like Japan that relies on exports for growth and whose population is aging.
Analysts say the government is now more likely to announce a spending package later this year, and the Bank of Japan could also move on further easing. Both would be a plus for the economy.
In one sign of hope, the numbers Monday show Japanese consumers are spending.
The government has been encouraging companies to give wage increases in negotiations that happen early next year, another move that could encourage spending.
I’ll save my next rant about the stupidity of GDP being a definitive metric at to whether or not an economy is in a recession for some other day. But, I do enjoy the spinmeisters use of the word “technical” in this regard. As if to say, it is only a technical recession, but, not a real one. Contrast and compare the verbiage use to their condemnation of Canada’s economy from their recent “technical recession”.
This is, what, the second year of Japan’s most aggressive QE the world has ever known? I think any rational person has gone beyond understanding that QE doesn’t work and now must move on to wondering what the central bankers are really trying to accomplish when they engage in QE.
On another note which may or may not be related …..
WASHINGTON (AP) — Foreign holdings of U.S. Treasury securities edged up slightly in September even though holdings by China and Japan, the two largest foreign owners of Treasury debt, both fell.
The Treasury Department says total holdings of U.S. government bonds by foreigners edged up a slight 0.05 percent to $6.1 trillion in September. The increase came after a 0.3 percent drop in August.
China trimmed its holdings by 1 percent to $1.26 trillion. Japan, the No. 2 holder of Treasury securities, reduced its holdings by 1.7 percent to $1.18 trillion.
China and Japan have been ever so slowly selling off US treasuries. On some months, both will actually increase their holdings, only to decrease them later.
I’ll have to go back and check, but, the “$6.1 trillion” quoted seems remarkably the same for the last couple of years, in spite of tremendous overall growth in the national debt.