Yet more evidence that The Big Slowdown is upon us.
Japanese economic growth fell far short of expectations in the June quarter, casting doubt on the momentum of the country�s recovery and sending the stock market tumbling to a three-month low.Considering the Japanese economy was growing at 6% over 2003:IV-2004:I, I'd say this is less a "cruising speed" and more a "rush hour traffic" speed. After all, the US in particular has been complaining to the Europeans for forever that their growth is always so weak -- in the 1-3% range. How then is 1.7% a comfortable pace?
Gross domestic product in the three months to end-June rose 0.4 per cent in real terms from the previous quarter, according to official figures released on Friday. That translated into annualised growth of 1.7 per cent compared with a consensus forecast of 4.1 per cent. Nominal GDP fell 0.3 per cent from the previous quarter, shrinking for the first time in five quarters. . . .
Ryo Hino, economist at JP Morgan Chase, called the numbers a �shocking result�, though most economists said the recovery remained largely on track.
Shuji Shirota, economist at Dresdner Kleinwort Wasserstein in Tokyo, said: �The Japanese economy has settled down to a cruising speed after a very strong rebound in the fourth quarter of last year and the first quarter of 2004.�
Note in particular how amazingly wrong economists have been today, both on the Japanese GDP data and the US trade deficit. Economists thought 2004:II Japanese growth was going to come in at 4.1% annualized; 1.7% is an incredibly rude awakening. Economists also thought the June US trade deficit was going to come in at $47bn instead of the whopper $56bn tally.
Looks like our professional crystal ball gazers need to remove their rose-colored glasses -- and fast. And workers? I hope you enjoyed the "robust recovery" of 2003-04, because the joy ride is clearly over now.