Japan’s economy shrinks as tax hike hits spending

Associated Press ^ | Aug 13, 2014 1:00 AM EDT | Yuri Kageyama

[Olog-hai]

The Japanese economy shrank at an annual pace of 6.8 percent in the second quarter after spending got slammed by a sales tax hike that kicked in from April, government figures showed Wednesday.

Japan’s gross domestic product, or the total output of goods and services, also contracted 1.7 percent during the April-June period from the previous quarter.

The decline in GDP was the worst since the March 2011 tsunami and quake disaster in northeastern Japan. In the first quarter of 2011, Japan’s economy shrank at an annual rate of 6.9 percent.

The weak figures were expected as consumers and businesses had front-loaded spending in the first quarter to beat the April 1 increase in sales tax. Economists expect spending to pick up again in coming months. …

[PGR88]

6.8%? If that continues, that’s a DEPRESSION!

[BenLurkin]

bttt

[VRW Conspirator]

6.8%? If that continues, that’s a DEPRESSION!

Well then, there is only one thing to do, raise taxes some more.

[Paul R.]

I can’t remember where I saw this posted: Japan’s economy — A bug in search of a windshield.

[Grzegorz 246]

“Japan’s gross domestic product, or the total output of goods and services, also contracted 1.7 percent during the April-June period from the previous quarter.”

Also ? -6.8% is “annualized” Q2 figure, forecasts for the whole 2014 are around +1%, so it is not as terribly bad... Pretty much usual stuff in case of Japan.

[expat_panama]

consumers and businesses had front-loaded spending in the first quarter to beat the April 1 increase in sales tax. Economists expect spending to pick up again in coming months.

Ah.  So if the gov't takes away more of everyone's money it doesn't really mean folks will have less money to spend elsewhere...

[1010RD]

Well, spending comes from either earnings or borrowings. Reduce either one and you get... wait for it... less spending.

Borrowing is just betting on future earnings. What’s happened here is government is “borrowing” taxes so consumers have to borrow spending from the future to pay for it.

[1010RD]

Japan’s economy is still centrally planned by MITI, no?

[Lurkina.n.Learnin]

Probably a combination of the tax and bad weather. Yea, that’s it, bad weather.

[expat_panama]

Yea, that’s it, bad weather.

lol!!! right, global warming...

[expat_panama]

government is “borrowing” taxes so consumers have to borrow spending from the future to pay for it

That makes perfect sense to me.  Horrible gov't policy but it makes perfect sense.