Friday, May 4, 2012

Japan, Part II: Lack of Demand

The above chart shows the total retail trade for Japan going back 40 years.  We can break this chart down into three areas:

1.) 1970-1990: increasing retail trade and demand in the economy
2.) 1990-1997: stagnation of activity around the 110 level
3.) 1997-today: stagnation of activity around the 100 level, although recent events are encouraging.

The above shows the total private final consumption expenditures for Japan.  This chart shows the stagnation in demand as well.

The above charts couldn't be clearer: the lack of overall demand in the Japanese economy is a big reason for their sluggish overall GDP  growth of the last 20 years (for more on this, see this post from yesterday).