Expectations on the Economy in Japan?

This is really an update to the post below but I thought it deserved to be above the fold so to speak. Some are indeed still very optimistic when it comes to Japan but now also official sources and evaluations are beginning to pick up on the signals. As such, the Japanese government has lowered its evaluation of the economy for the first time since 2004. As Edward reports over at Bonobo Land;  

In many ways this is significant. The Japanese government has just reduced its economic forecast for the first time since December 2004. So it seems that now all the signs are there that the longest economic expansion since the great recession began is now begining to come to an end. Foremost among the weak points is, of cousre, domestic consumption.

Please take note here that especially it is the flat and indeed downward trending consumer spending figures which are beginning to take their toll on the economy. This is rather significant because this will make the explanation and analysis of the underlying causes extremely important to get the big picture. Business cycle theory won't do us much good here I am afraid.

(From Bloomberg linked above; the whole article is a good read by the way!)

Japan's government lowered its evaluation of the economy for the first time in almost two years, after sluggish wage growth prompted a slump in consumer spending.

``The economy is recovering, despite some weakness in consumption,'' the Cabinet Office said in its report for November in Tokyo today. ``Private consumption is almost flat,'' it added, cutting the assessment for the first time since December 2004.

A spell of bad weather and tepid wage gains led consumption to decline the most since 2004 last quarter. A prolonged slump in consumer spending, which accounts for more than half of the economy, may prompt the Bank of Japan to delay its second interest-rate increase in six years.

``It is too early to expect personal consumption to start picking up again,'' as companies keep the lid on wages, Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo, wrote in a note to clients before today's report was released. ``We stick to our view that the next rate hike will be delayed until the fourth quarter of next year.'  
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