Japan 4Q 2.2% GDP: Another Government Statistical Pump

According to the establishment the Japanese economy has shed the recession garb

…but for how long?

From the Nikkei Asia:

The Japanese economy expanded an annualized real 2.2 percent in the three months to December, marking the first growth in three quarters, the government said Monday.

The growth in October-December inflation-adjusted gross domestic product -- the total value of goods and services produced at home -- corresponds to a 0.6 percent increase from the previous quarter and compares with an average market forecast of 3.86 percent annualized growth.

In the fourth quarter, private consumption, accounting for around 60 percent of Japan's GDP, rose a real 0.3 percent, supported by sales of mobile phones and personal computers, an official of the Cabinet Office said.

Corporate capital spending, which the government sees as key to shoring up the economy, gained 0.1 percent following a 0.1 percent decrease in the July-September period.

The Japanese government seems to have three measures in looking at the GDP

The above represents the headline data or the quarterly growth annualized.

The above represents the non-annualized quarter growth

The two numbers reveals a lift of Japan’s economy out of a recession.

This is the GDP annual growth rate. Seen from the annual growth, Japan remains in a recession

So two stories from three different statistics. But the establishment goes to report the data that fits its agenda

Yet whatever the data used, in my opinion 4Q performance has merely been a bounce that represents a temporary anesthetic effect from BoJ’s QE 2.0

The reason: Private investments have been lackluster in the 4Q even when seen from the lens of the headline statistics as sourced from Japan’s Cabinet Office.

Yet the “surge” in consumption may have most likely been a response to the yen’s dramatic devaluation in  4Q. The yen lost 7.6% over the same period!

So this may be another frontloading of expenditures in the face of severe price disturbances in the system.

Additionally, 4Q GDP has more been about government really. Public investments made a substantial contribution to the growth statistics.

Mediocre investment activities, consumption boost from BoJ’s devaluation, and a big boost from government spending means Japan’s 4Q GDP represents no less than a government statistical pump—or growth only in statistics.

If the recession’s influence has been to spike the stock market, what more a statistical pump by the government. So the Nikkei hits the 18,000 an eight year. Pumping and pushing of asset markets based on mirages. But the real economy struggles.