TOKYO – Japan’s economy remained mired in recession late last year, shrinking 0.4 percent in annualized terms for the third straight quarter of contraction on feeble demand both at home and overseas.
The government reported today that growth for all of 2012 was 1.9 percent.
The figures were worse than expected, as many analysts had forecast the economy may have emerged from recession late last year as the Japanese yen weakened against other major currencies, giving a boost to Japanese export manufacturers.
Prime Minister Shinzo Abe, who took office in late December, is championing aggressive spending and monetary stimulus to help get growth back on track. He has lobbied the central bank to set an inflation target aimed at breaking out of Japan’s long bout of deflation, or falling prices, that he says are inhibiting corporate investment and growth.
However the Bank of Japan was not expected to announce any major new initiatives from a policy meeting today.
Consumer spending slows in January
WASHINGTON – With higher payroll taxes starting to kick in, retail sales rose in January at their smallest rate in three months. Consumers pulled back a bit on their purchases of cars, clothes and home furnishings, the government said Wednesday.
Overall, retail sales ticked up a modest 0.1 percent last month from December, after gains of 0.5 percent in each of the prior two months. The subdued January performance was in line with consensus forecasts, as many analysts were expecting a drop-off in the growth rate after the expiration of the payroll tax holiday, which translates to about $40 less in take-home pay for the average worker every two weeks.
The latest Commerce Department figures are consistent with other indicators showing a weakening of consumer confidence at the start of this year, even as Americans are becoming somewhat more comfortable using credit again, said Kathy Bostjancic, an economist at the Conference Board.
In January, car sales dipped 0.1 percent from December, but remained solidly higher from a year ago. And last month there were healthy sales gains at department stores, sporting goods shops and at nonstore retailers.