Japan economic growth halves in July-Sept quarter

As predicted, Abenomics is starting to show its true face.

“Income is improving,” Hashimoto said. “Personal spending will surely accelerate before the consumption tax hike (in April).”

And how about AFTER the tax hike, Hashimoto? as in 5 months from now? And I'm still waiting for my household income to go up.

World's third largest economy expanded by mere 0.5%? margin of error unknown.

Oh, what a fantastic surprise. Abenomics - which anyone with half a brain could see was a bucket of porkbarrel corruption - is stalling.

Never mind because we taxpayers can shoulder the burden for Abe and his construction industry cronies for the rest of our lives.

This place is a feudal kharzi.

ozymandiaskingofkingsNov. 14, 2013 - 12:09PM JST

Oh, what a fantastic surprise. Abenomics - which anyone with half a brain could see was a bucket of porkbarrel corruption - is stalling.

Actually quite a few of the 'Japan Is Always Right' crew who post on here were singing its potential praises a year ago.

Poster like myself, Globalwatcher and SmithinJapan always said that it would have a brief sugar high and then fall flat on its face. The only difference would be that the national debt would go up by about 10 percenrage points.

Abenomics always was and always will be the usual LDP pork barreling and currency manipulation dressed in different clothes.

“Income is improving,” Hashimoto said.

Income might be improving for the conpanies and the Dankai generation, but wages and work conditions are not for the rest of Japan.

It seems the smoke is clearing and Abenomics is being seen in its true light - A major fail!

Still has not addressed the shrinking Tax base, it's not rocket science why do these people still claim to be leaders when they have no idea? Ok his dad was in charge, it's Japan, not promoted on merit blood lines count. But even then basic math must give a hint??there are things to fix, there are things to improve. Where is the leadership? Fake missile drills on an island just don't do it!

The politicians are giving 'what' back to the people? Higher taxes and failing services mean very little goes back to the taxpayer except longer unpaid hours in the factory or office trying to survive........

This is the large scale plunder before the inevitable collapse. The Japanese bureaucracy and compliant media have effectively destroyed and smeared any effective opposition for at least a generation and again turned Japan into a one party 'democracy.' The last government dared to want to change the status quo and cut government spending and they were broken by the media and made to look ridiculous. Now the media almost unanimously sings the praises of the new government's economic policies and everyone believes it, even there is no evidence in their daily lives that things have got better. The media in this country is largely led by the nose of the bureaucrats and report what they are told. Meanwhile, the plunder goes on unnoticed. Despite what they are telling me I know what I can see with my own eyes and that is that the amount of construction work is increasing at incredible levels. They know that Japan's economy is on the verge of collapse and they are taking what they can now before it is all over.

Abenomics always was and always will be the usual LDP pork barreling and currency manipulation dressed in different clothes.

I think this one is different, this time they know the party is effectively over. They know they can't even fix this economy, so they are just grabbing what they can whilst the rest of the country who have worked hard and saved their whole lives is going to be put into beggary.

1.9% annualized growth for an economy with a shrinking population actually sounds pretty good to me.

@pochan

Within a minute of my home there are at least 6 new builds in progress. To say the least unusual! Do the construction companies know something the general public does not? What life will there be in the Japanese consumer after April 2014?

ADK99Nov. 14, 2013 - 01:15PM JST

1.9% annualized growth for an economy with a shrinking population actually sounds pretty good to me.

Could have got the same growth and more, if instead of squandering the trillions on pork barrelling to their economic pals, they had distributed the money to the Japanese populace.

1.9% annualized growth for an economy with a shrinking population actually sounds pretty good to me.

Unfortunately, again, most of this "growth" was the result of government spending, not an increase in the private-sector economy. When you subtract the government's "stimulus" spending, actual growth is approximately nil.

None of this looks good. With factory orders already fulfilled for the holiday shopping season, new car model releases completed, and the Japanese not being big domestic spenders in the winter season, the economy is likely to begin a long slide which will last until spring. At about the time spending normally begins to increase for the Golden Week holidays, and the ramp up in factory production for the summer and fall, we can expect the consumption tax to kick in.

Abe has never made any sense. His policy requires people to spend more money domestically as their taxes and costs (prices) are increased. He is totally reliant on the 14% of the economy that is export-based and on stimulus (huge pork-barrel projects) that the country has no way to pay back. Wait until April for the real crash.

I love this "income is improving" statement I have been hearing lately. Whose income? Has minimum wage been increased? No! Any companies that rely on imports to produce domestically sold products are looking at scaling back wages or downsizing.

And what's with this new proposed tax on K-cars? It is just a government scam IMO. Scare the population that taxes on K-cars are gonna rise so they buy new cars before these taxes hit, add the consumption tax to the scam and BLAMO! You see!!! Abenomics is working.

"As predicted, Abenomics is starting to show its true face".

Which is around 3% growth by year-end? That's pretty good by G7 standards, and way better than the pre-Abenomics years. Also, remember that it's an aggregate figure. The mass immigration countries like the US, UK etc. get a portion of their GDP growth from population expansion, while developing countries get theirs from native population growth.

Bigger ain't better, and aggregate figures don't show a complete picture in a country with a shrinking population.

JeffLeeNov. 14, 2013 - 04:51PM JST

Which is around 3% growth by year-end? That's pretty good by G7 standards, and way better than the pre-Abenomics years.

Please read sangetsu's post for a true picture, but then again your the poster who doesn't believe Japan has any sovereign debt, so don't bother.

What the figures also failed to convey according to JapaneseTV was that Japan's exports, in size, have actually shrunk in the last quarter: currency manipulation aside.

Which is around 3% growth by year-end?

Sorry, but nearly all of this growth was from the "second arrow" of Abenomics, which was public works projects paid for with money the government borrowed.

Were the government more honest with their growth figures, they would subtract government spending from GDP rather than adding it to the figure and calling it "growth". This deficit spending on stimulus measures is merely welfare for contractors, increases the national debt, and actually has a negative effect on net growth.

Subtract the government spending from the picture, and there has been almost no growth. In fact, there is a fair chance that the economy has actually contracted over the last two quarters.

"“Income is improving,” Hashimoto said". Can we see an article showing the proof of this statement. I am sure the working population of Japan would welcome this information.

"Were the government more honest with their growth figures, they would subtract government spending from GDP rather than adding it to the figure and calling it "growth"."

How exactly do you do that? And who exactly does that? Especially since govt spending is how money enters circulation in the first place, and much of the spending is in the private sector.

When Reagan, for example, engaged in a frenzy of deficit spending, handing a trillion dollars of public money to the Pentagon to spend on gov't hardware and services to be used by gov't employees, do you think anyone attempted to "subtract" the economic effects? LOL.

With an aging and shrinking population, how can you expect growth?

This is THE challenge Japan is actually facing. Increasing the debt in these circumstances is a suicide, frustration will follow and all the bad side of nationalism will be louder and louder.

Not a bright future unless women and immigration is supported to maintain at least the tax payers base. But that means a huge structural and mindset reform that can be done only in the course of 1-2 generations.

How exactly do you do that? And who exactly does that? Especially since govt spending is how money enters circulation in the first place, and much of the spending is in the private sector.

Economics 101. The government does not generate revenue, it collects it and spends it. The government's purpose is mainly to defend the country, enforce the peace, provide insfrastructure, and maintain a level playing field for those who do business and work. The government spends money, it does not create it. The money the government spends facilitates the well-being of the people. And it is the people, through their hard work and enterprise who generate the revenue.

The wealth of a nation does not belong to the government, or come from the government, it belongs to the people and comes from the people. The majority of the money and goods in the country is privately owned. The governments of each country are merely hired hands, who defray their operating expense by collecting fees in the form of taxes. When did people forget that they are the the basis of their nations, and not their governments?

Analysts have been warning that Tokyo’s bold pro-growth program—a mix of big government spending and central bank monetary easing—is not enough on its own without promised economic reforms.

I have been advocating this "STRUCTURAL economic reforms" for years. I have not seen any drastic policy changes yet in Japan. Otherwise, you are creating nothing but bubbles that will burst while the national sovereign debt will continue to increase.

"The government spends money, it does not create it."

Malarky. The gov't is the sole authority for printing money and issuing new money. For example, when the state pays pensions, it electronically credits recipients' bank accounts. The pensioners make withdraws, and money is created, which is then spent. The spending multiplies throughout the economy, from consumer-end retailers all the way to raw material producers.

Every single yen in the economy originated from a single source: the government.

Were the government more honest with their growth figures, they would subtract government spending from GDP rather than adding it to the figure and calling it "growth".

This is classic. This is worth saving. Bump.

Malarky. The gov't is the sole authority for printing money and issuing new money.

Sorry, this is incorrect. First, the government doesn't print money, no government prints money. Money is no longer used to pay for transactions around the world. Governments print currency, which is an entirely different thing.

Money has intrensic value. When America was on the gold standard, the dollar was considered money, because you could take your paper dollars to a federal reserve bank and exchange them for gold and silver. Printed on the face of every note were the words "redeemable for lawful money at any federal reserve bank". Every dollar in circulation was backed by a reserve of gold and silver.

Currency has no intrinsic value. The government prints currency, but the government cannot assign a particular value to it. It is the private sector which assigns value to currency. Governments who mismanage their economies see the value of their currencies fall, or even disappear. In Venezuela right now, the government is printing currency hand-over-fist, using it to pay government workers and the like, but the economy is so poorly managed, and so much currency is being printed that it is becoming worthless.

This is one reason why both America and Japan are printing huge amounts of currency. They believe the value of the currency is rated too high. This has caused deflation or stagflation. Since both America and Japan carry massive debts, a certain amount of inflation is necessary to reduce the wieight of thse debts, which are not tied to inflation. A ten percent increase in inflation translates to a ten percent decreas in the value of the debts which were incurred at the prior level.

Please do not comments on posts or topics about which you are ignorant.

nigelboyNov. 15, 2013 - 09:13AM JST

This is classic. This is worth saving. Bump.

DogNov. 14, 2013 - 12:20PM JST

Actually quite a few of the 'Japan Is Always Right' crew who post on here were singing its potential praises a year ago.

As I said, a year ago, some on here were singing its praises.....

"Currency has no intrinsic value."

What "intrinsic value" does gold have? It can make shiny things and has limited industrial applications. The bulk of its value is imagined: what speculators think it should be worth. If all the gold disappeared tomorrow, it would virtually make no difference to the world.

Further, if you actually want to use gold for exchange, you need to change it....to a paper fiat currency. In the meantime, it collects no dividends and costs a fortune to store.

Taxation gives paper currency real value. If you owe your taxes in dollars, you need to have dollars. Thus demand for it is created. No major financial obligations require the use of precious metals...they require real money, like dollars and yen.

What "intrinsic value" does gold have?

Let's take a little look at history, back to the time of the great depression. It was at this time that currencies came into vogue among the larger nations. Do you know what happened to the value of these currencies during this time? Before the Depression, a German mark would buy a few loaves of bread. At the height of the depression, a million marks wouldn't buy a single loaf. Hyper-inflation (or devaluation) of currencies happens regularly around the world. Look at Venezuela, or Brazil. People in these countries pay taxes, don't they? Why is their currency becoming increasingly worthless?

On the other hand, the countries which used money did not see the value if their bank notes fall, because the value of these notes was backed by gold and silver.

Precious metals have intrinsic value because people have always believed they have. This may not be logical, but it is a fact. And this is why even today, every country on earth holds a reserve of precious metals. The amount of precious metals a country possesses goes a long way to providing stability to it's currency.

The value of currency is not determined by the government. Where were you the last couple of years when the yen became so strong? Do you know why it became strong? Not because the Japanese government wanted it to be so, but because mismanagement of the European and American economies caused people to distrust the value of the dollar and the euro.

The intrinsic value of gold did not diminish during this time, did it? You say gold "collects no dividends" (btw, dividends are paid, not collected), I put all of my savings in gold when it cost $284 an ounce. What is the price of gold today? Tell me, would I have done better to keep my money in bank notes?

The old Weimar Republic comparison, eh? I guess you don't know that the Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency.

And Japan's debts are denominated in....yen! America's... in dollars! Not gold and not foreign currencies. And who issues yen? Japan! Dollars? America! So your comparison is...absolutely bogus!

And Japan's debts are denominated in....yen! America's... in dollars! Not gold and not foreign currencies. And who issues yen? Japan! Dollars? America! So your comparison is...absolutely bogus!

Forget it JeffLee. They're in the school of Kyle Bass who keep extending the expiration date of "Japan's collapse".

Yen denominated, over 94% owned by the Japanese public,　total household financial assets of 1,600 trillion yen, top net external creditor for 22 consecutive years at a balance of 300 trillion yen.

JGB--->Government handouts(pension, social servies)--->Receipient (older generation) don't spend---->Massive holdings by financial institutions---->buy JGB and the cycle continues thanks to the deflationary spiral.

Indeed, Nigel, I read last year that Kyle's Japan fund was off 60%. Give Kyle a dollar, he gives you 40 cents in return. Now there's a savvy investment. One man's deficit is another man's asset.

"What is the price of gold today?"

Around $1,300 an ounce. Nearly half from it's inflation-adjusted peak of $2,100 in 1980, and down nearly 40% for the year. Yep, you can make money on gold, but you can also lose money on gold, depending on your timing. Just like pig manure or any other commodity.