Thursday, February 15, 2007

The Wave Hits

A huge jump in GDP, even in the nominal figures, reported by the Cabinet Office today.

The wire services are all jumping up and down about the rise in consumer spending. Nice, up 0.7% in real, that is to say nominal, money.

Japan, the only advanced industrialized economy where real GDP is a complete, delusional fiction.

I tend to look further down the report and worry about the immense rise in private residential investment (up 2.3%). Like those of us in Tokyo and Aichi could ignore the forests of kōkyū jūtaku shooting up into the sky (Can you believe a 55 59-story residential tower next to Musashi-Kosugi Station?)

Private non-residential investment--all that capex and all those great glass temples of commerce--has slowed a bit--but only after soaring like bird earlier this year.

Government spending also increased but only after falling like a stone during the last few months of the Koizumi administration (hints of a lessened commitment to fiscal reform, anyone?)

Also interesting is the quarter-to-quarter drop in imports, with negative growth in the nominal figures. This took place as the steep drop of the value of the yen in Q4 kicked European exporters in the gut. Before predicting serious trans-Eurasian and to a lesser extent trans-Pacific friction over Japan's weak appetite for imports, however, let us see how much of this drop can be attributed to falling energy prices.

Look today for a dipping dollar, a plummeting euro-yen rates, rising bond prices and Bank of Japan officials dancing naked on the Nihonbashi and kissing the sidewalk.


Jun Okumura said...

FYI: the Q4 GDP (nominal, before seasonal adjustment) was 134,188.4 billion yen. Q3 and Q4 petroleum imports were 3,147.6 and 2,710.8 billion yen respectively, which is a 436.8 billion yen quarterly decline. That's a quarterly 0.3% GDP bump. We probably have the Q-on-Q drop in petroleum prices to thank for that. Petroleum prices will be more or less neutral in 2007 Q1.

Your suspicions about falling EU imports require a little more digging, here. You'll have to pay me if you really want to know.

As for residential and office buildings, I was surprised when the 2003 office oversupply crisis wound up doing about as much damage as the 2006 hurricanes in Florida. Apparently, the pull of the big city is as strong as ever.]

I'll give you 20,000 yen to my 30,000, BOJ raises 0.25% next week.

MTC said...

Thanks for the nominal petroleum figures for Q3 and Q4. I guess that even an idiot like moi can manage to hit the side of the barn every once in a while.

As for the rate rise, I will not take your money. 0.25 is a given. I just hope they put their clothes back on in the meantime.