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).
2 comments:
Could it be possible that Japan doesn't need to grow? Maybe they've reached some kind of equilibrium in the economy partly because it's insular and land scarce?
20 years is a long time, there has to be more to it.
Circular argument makes for circular post. There's no demand so there's nobody buying things. Really.
Maybe there's no increase in demand because there's no increase in their population. These aren't hard points to connect, if they even need to be connected.
Why don't we make the same analysis on the US and try to extrapolate future demand and thus GDP growth?
Economics without speculation is just accounting.
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