Global Exchange Rate Struggle, Recovery without Hiring, Ten Million Fewer Full-time Jobs, Youth and Middle Age Unemployment, United States International Trade, World Cyclical Slow Growth and Global Recession Risk: Part V

 

Global Exchange Rate Struggle, Recovery without Hiring, Ten Million Fewer Full-time Jobs, Youth and Middle Age Unemployment, United States International Trade, World Cyclical Slow Growth and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015

I Recovery without Hiring

IA1 Hiring Collapse

IA2 Labor Underutilization

ICA3 Ten Million Fewer Full-time Jobs

IA4 Theory and Reality of Cyclical Slow Growth Not Secular Stagnation: Youth and Middle-Age Unemployment

IIA United States International Trade

IIB Import and Export Prices

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/ns/cs.aspx?id=28) to show GDP in dollars in 2012 and the growth rate of real GDP of the world and selected regional countries from 2013 to 2016. The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the recession of 2007 to 2009. The IMF has changed its forecast of the world economy to 3.3 percent in 2013 but accelerating to 3.3 percent in 2014, 3.8 percent in 2015 and 4.0 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,523 billion of world output of $72,688 billion, or 47.5 percent, but are projected to grow at much lower rates than world output, 1.9 percent on average from 2013 to 2016 in contrast with 3.6 percent for the world as a whole. While the world would grow 15.2 percent in the four years from 2013 to 2016, the G7 as a whole would grow 8.5 percent. The difference in dollars of 2012 is rather high: growing by 15.2 percent would add around $11.0 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,938 billion but growing by 8.0 percent would add $5.8 trillion of output to the world, or about the output of Japan in 2012. The “two speed” concept is in reference to the growth of the 150 countries labeled as emerging and developing economies (EMDE) with joint output in 2012 of $27,512 billion, or 37.8 percent of world output. The EMDEs would grow cumulatively 20.7 percent or at the average yearly rate of 4.8 percent, contributing $5.7 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,387 billion of China in 2012. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2012 adds to $14,511 billion, or 19.9 percent of world output, which is equivalent to 42.0 percent of the combined output of the major advanced economies of the G7.

Table V-1, IMF World Economic Outlook Database Projections of Real GDP Growth

	GDP USD 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016
World	72,688	3.3	3.3	3.8	4.0
G7	34,523	1.5	1.7	2.3	2.3
Canada	1,709	2.0	2.3	2.4	2.4
France	2,688	0.3	0.4	1.0	1.6
DE	3,428	0.5	1.4	1.5	1.8
Italy	2,014	-1.9	-0.2	0.9	1.3
Japan	5,938	1.5	0.9	0.8	0.8
UK	2,471	1.7	3.2	2.7	2.4
US	16,163	2.2	2.2	3.1	3.0
Euro Area	12,220	-0.4	0.8	1.3	1.7
DE	3,428	0.5	1.4	1.5	1.8
France	2,688	0.3	0.4	1.0	1.6
Italy	2,014	-1.9	-0.2	0.9	1.3
POT	212	-1.4	1.0	1.5	1.7
Ireland	211	-0.3	1.7	2.5	2.5
Greece	249	-3.9	0.6	2.9	3.7
Spain	1,323	-1.2	1.3	1.7	1.8
EMDE	27,512	4.7	4.4	5.0	5.2
Brazil	2,248	2.5	0.3	1.4	2.2
Russia	2,017	1.3	0.2	0.5	1.5
India	1,859	5.0	5.6	6.4	6.5
China	8,387	7.7	7.4	7.1	6.8

Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal

Source: IMF World Economic Outlook databank http://www.imf.org/external/ns/cs.aspx?id=28

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/ns/cs.aspx?id=28). Table V-2 is constructed with the WEO database to provide rates of unemployment from 2012 to 2016 for major countries and regions. In fact, unemployment rates for 2013 in Table I-2 are high for all countries: unusually high for countries with high rates most of the time and unusually high for countries with low rates most of the time. The rates of unemployment are particularly high in 2013 for the countries with sovereign debt difficulties in Europe: 16.2 percent for Portugal (POT), 13.0 percent for Ireland, 27.3 percent for Greece, 26.1 percent for Spain and 12.2 percent for Italy, which is lower but still high. The G7 rate of unemployment is 7.1 percent. Unemployment rates are not likely to decrease substantially if slow growth persists in advanced economies.

Table V-2, IMF World Economic Outlook Database Projections of Unemployment Rate as Percent of Labor Force

	% Labor Force 2012	% Labor Force 2013	% Labor Force 2014	% Labor Force 2015	% Labor Force 2016
World	NA	NA	NA	NA	NA
G7	7.4	7.1	6.5	6.3	6.1
Canada	7.3	7.1	7.0	6.9	6.8
France	9.8	10.3	10.0	10.0	9.9
DE	5.5	5.3	5.3	5.3	5.3
Italy	10.7	12.2	12.6	12.0	11.3
Japan	4.3	4.0	3.7	3.8	3.8
UK	8.0	7.6	6.3	5.8	5.5
US	8.1	7.4	6.3	5.9	5.8
Euro Area	11.3	11.9	11.6	11.2	10.7
DE	5.5	5.3	5.3	5.3	5.3
France	9.8	10.3	10.0	10.0	9.9
Italy	10.7	12.2	12.6	12.0	11.3
POT	15.5	16.2	14.2	13.5	13.0
Ireland	14.7	13.0	11.2	10.5	10.1
Greece	24.2	27.3	25.8	23.8	20.9
Spain	24.8	26.1	24.6	23.5	22.4
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	5.4	5.5	6.1	5.9
Russia	5.5	5.5	5.6	6.5	6.0
India	NA	NA	NA	NA	NA
China	4.1	4.1	4.1	4.1	4.1

Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries)

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IIIQ2014 available now for all countries. There are preliminary estimates for most countries for IVQ2014. Growth is weak throughout most of the world.

• Japan. The GDP of Japan increased 1.1 percent in IQ2012, 4.3 percent at SAAR (seasonally adjusted annual rate) and 3.5 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP fell 0.4 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.4 percent, which is much lower than 4.3 percent in IQ2012. Growth of 3.5 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.5 percent in IIIQ2012 at the SAAR of minus 2.2 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP decreased 0.2 percent in IVQ2012 at the SAAR of minus 0.6 percent and changed 0.0 percent relative to a year earlier. Japan grew 1.4 percent in IQ2013 at the SAAR of 5.6 percent and increased 0.5 percent relative to a year earlier. Japan’s GDP increased 0.8 percent in IIQ2013 at the SAAR of 3.3 percent and increased 1.4 percent relative to a year earlier. Japan’s GDP grew 0.4 percent in IIIQ2013 at the SAAR of 1.4 percent and increased 2.2 percent relative to a year earlier. In IVQ2013, Japan’s GDP decreased 0.3 percent at the SAAR of minus 1.2 percent, increasing 2.3 percent relative to a year earlier. Japan’s GDP increased 1.3 percent in IQ2014 at the SAAR of 5.1 percent and increased 2.4 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 1.6 percent at the SAAR of minus 6.4 percent and fell 0.3 percent relative to a year earlier. Japan’s GDP contracted 0.7 percent in IIIQ2014 at the SAAR of minus 2.6 percent and fell 1.4 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.4 percent, at the SAAR of 1.5 percent, decreasing 0.8 percent relative to a year earlier.
• China. China’s GDP grew 1.4 percent in IQ2012, annualizing to 5.7 percent, and 8.1 percent relative to a year earlier. The GDP of China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 percent and 7.6 percent relative to a year earlier. China grew at 2.0 percent in IIIQ2012, which annualizes at 8.2 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 1.9 percent, which annualizes at 7.8 percent, and 7.9 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.7 percent, which annualizes at 7.0 percent and 7.8 percent relative to a year earlier. In IIQ2013, China grew at 1.8 percent, which annualizes at 7.4 percent and 7.5 percent relative to a year earlier. China grew at 2.3 percent in IIIQ2013, which annualizes at 9.5 percent and 7.9 percent relative to a year earlier. China grew at 1.8 percent in IVQ2013, which annualized to 7.4 percent and 7.6 percent relative to a year earlier. China’s GDP grew 1.6 percent in IQ2014, which annualizes to 6.6 percent, and 7.4 percent relative to a year earlier. China’s GDP grew 1.9 percent in IIQ2014, which annualizes at 7.8 percent, and 7.5 percent relative to a year earlier. China’s GDP grew 1.9 percent in IIIQ2014, which is equivalent to 7.8 percent in a year, and 7.3 percent relative to a year earlier. The GDP of China grew 1.5 percent in IVQ2014, which annualizes at 6.1 percent, and 7.3 percent relative to a year earlier. There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.htm). Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2014.
• Euro Area. GDP fell 0.1 percent in the euro area in IQ2012 and decreased 0.4 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.3 percent IIQ2012 and fell 0.8 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.8 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.4 percent relative to the prior quarter and fell 0.9 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.4 percent and decreased 1.2 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IIQ2013 and fell 0.6 percent relative to a year earlier. In IIIQ2013, euro area GDP increased 0.2 percent and fell 0.3 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IVQ2013 and increased 0.4 percent relative to a year earlier. In IQ2014, the GDP of the euro area increased 0.3 percent and 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.1 percent in IIQ2014 and increased 0.8 percent relative to a year earlier. The euro area’s GDP increased 0.2 percent in IIIQ2014 and increased 0.8 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IVQ2014 and increased 0.9 percent relative to a year earlier.
• Germany. The GDP of Germany increased 0.3 percent in IQ2012 and 1.5 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.1 percent and increased 0.3 percent relative to a year earlier but 0.8 percent relative to a year earlier when adjusted for calendar (CA) effects. In IIIQ2012, Germany’s GDP increased 0.1 percent and 0.1 percent relative to a year earlier. Germany’s GDP contracted 0.4 percent in IVQ2012 and decreased 0.3 percent relative to a year earlier. In IQ2013, Germany’s GDP decreased 0.4 percent and fell 1.8 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.8 percent and 0.5 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IIIQ2013 and 0.8 percent relative to a year earlier. In IVQ2013, Germany’s GDP increased 0.4 percent and 1.0 percent relative to a year earlier. The GDP of Germany increased 0.8 percent in IQ2014 and 2.6 percent relative to a year earlier. In IIQ2014, Germany’s GDP contracted 0.1 percent and increased 1.0 percent relative to a year earlier. The GDP of Germany increased 0.1 percent in IIIQ2014 and increased 1.2 percent relative to a year earlier. Germany’s GDP increased 0.7 percent in IVQ2014 and increased 1.6 percent relative to a year earlier.
• United States. Growth of US GDP in IQ2012 was 0.6 percent, at SAAR of 2.3 percent and higher by 2.6 percent relative to IQ2011. US GDP increased 0.4 percent in IIQ2012, 1.6 percent at SAAR and 2.3 percent relative to a year earlier. In IIIQ2012, US GDP grew 0.6 percent, 2.5 percent at SAAR and 2.7 percent relative to IIIQ2011. In IVQ2012, US GDP grew 0.0 percent, 0.1 percent at SAAR and 1.6 percent relative to IVQ2011. In IQ2013, US GDP grew at 2.7 percent SAAR, 0.7 percent relative to the prior quarter and 1.7 percent relative to the same quarter in 2013. In IIQ2013, US GDP grew at 1.8 percent in SAAR, 0.4 percent relative to the prior quarter and 1.8 percent relative to IIQ2012. US GDP grew at 4.5 percent in SAAR in IIIQ2013, 1.1 percent relative to the prior quarter and 2.3 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html). In IVQ2013, US GDP grew 0.9 percent at 3.5 percent SAAR and 3.1 percent relative to a year earlier. In IQ2014, US GDP decreased 0.5 percent, increased 1.9 percent relative to a year earlier and fell 2.1 percent at SAAR. In IIQ2014, US GDP increased 1.1 percent at 4.6 percent SAAR and increased 2.6 percent relative to a year earlier. US GDP increased 1.2 percent in IIIQ2014 at 5.0 percent SAAR and increased 2.7 percent relative to a year earlier. In IVQ2014, US GDP increased 0.5 percent at SAAR of 2.2 percent and increased 2.4 percent relative to a year earlier.
• United Kingdom. In IQ2012, UK GDP increased 0.1 percent, increasing 1.0 percent relative to a year earlier. UK GDP fell 0.2 percent in IIQ2012 and increased 0.6 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.7 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and increased 0.4 percent relative to a year earlier. UK GDP increased 0.6 percent in IQ2013 and 0.9 percent relative to a year earlier. UK GDP increased 0.6 percent in IIQ2013 and 1.7 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.7 percent and 1.6 percent relative to a year earlier. UK GDP increased 0.4 percent in IVQ2013 and 2.4 percent relative to a year earlier. In IQ2014, UK GDP increased 0.7 percent and 2.5 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2014 and 2.6 percent relative to a year earlier. In IIIQ2014, UK GDP increased 0.7 percent and increased 2.5 percent relative to a year earlier. UK GDP increased 0.5 percent in IVQ2014 and increased 2.7 percent relative to a year earlier.
• Italy. Italy has experienced decline of GDP in nine consecutive quarters from IIIQ2011 to IIIQ2013 and in IIQ2014 and IIIQ2014. Italy’s GDP fell 0.9 percent in IQ2012 and declined 2.3 percent relative to IQ2011. Italy’s GDP fell 0.6 percent in IIQ2012 and declined 3.1 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.6 percent and declined 3.1 percent relative to a year earlier. The GDP of Italy contracted 0.6 percent in IVQ2012 and fell 2.7 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.8 percent and fell 2.6 percent relative to a year earlier. Italy’s GDP fell 0.1 percent in IIQ2013 and 2.0 percent relative to a year earlier. The GDP of Italy increased 0.1 percent in IIIQ2013 and declined 1.4 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and decreased 0.8 percent relative to a year earlier. In IQ2014, Italy’s GDP decreased 0.1 percent and fell 0.1 percent relative to a year earlier. The GDP of Italy fell 0.2 percent in IIQ2014 and declined 0.3 percent relative to a year earlier. In IIIQ2014, Italy’s GDP contracted 0.1 percent and fell 0.5 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IVQ20214 and declined 0.5 percent relative to a year earlier
• France. France’s GDP increased 0.2 percent in IQ2012 and increased 0.6 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.4 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.4 percent relative to a year earlier. France’s GDP fell 0.2 percent in IVQ2012 and changed 0.0 percent relative to a year earlier. In IQ2013, France’s GDP changed 0.0 percent and declined 0.2 percent relative to a year earlier. The GDP of France increased 0.7 percent in IIQ2013 and 0.7 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIIQ2013 and increased 0.3 percent relative to a year earlier. The GDP of France increased 0.3 percent in IVQ2013 and 0.8 percent relative to a year earlier. In IQ2014, France’s GDP changed 0.0 percent and increased 0.8 percent relative to a year earlier. In IIQ2014, France’s GDP contracted 0.1 percent and changed 0.0 percent relative to a year earlier. France’s GDP increased 0.3 percent in IIIQ2014 and increased 0.4 percent relative to a year earlier. The GDP of France increased 0.1 percent in IVQ2014 and increased 0.2 percent relative to a year earlier

Table V-3, Percentage Changes of GDP Quarter on Prior Quarter and on Same Quarter Year Earlier, ∆%

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.6        SAAR: 2.3	2.6
Japan	QOQ: 1.1 SAAR: 4.3	3.5
China	1.4	8.1
Euro Area	-0.1	-0.4
Germany	0.3	1.5
France	0.2	0.6
Italy	-0.9	-2.3
United Kingdom	0.1	1.0
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.4         SAAR: 1.6	2.3
Japan	QOQ: -0.4 SAAR: -1.4	3.5
China	2.1	7.6
Euro Area	-0.3	-0.8
Germany	0.1	0.3 0.8 CA
France	-0.3	0.4
Italy	-0.6	-3.1
United Kingdom	-0.2	0.6
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.6  SAAR: 2.5	2.7
Japan	QOQ: –0.5 SAAR: –2.2	0.2
China	2.0	7.4
Euro Area	-0.1	-0.8
Germany	0.1	0.1
France	0.2	0.4
Italy	-0.6	-3.1
United Kingdom	0.8	0.7
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	1.6
Japan	QOQ: -0.2 SAAR: -0.6	0.0
China	1.9	7.9
Euro Area	-0.4	-0.9
Germany	-0.4	-0.3
France	-0.2	0.0
Italy	-0.6	-2.7
United Kingdom	-0.3	0.4
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.7 SAAR: 2.7	1.7
Japan	QOQ: 1.4 SAAR: 5.6	0.5
China	1.7	7.8
Euro Area	-0.4	-1.2
Germany	-0.4	-1.8
France	0.0	-0.2
Italy	-0.8	-2.6
UK	0.6	0.9
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.4 SAAR: 1.8	1.8
Japan	QOQ: 0.8 SAAR: 3.3	1.4
China	1.8	7.5
Euro Area	0.3	-0.6
Germany	0.8	0.5
France	0.7	0.7
Italy	-0.1	-2.0
UK	0.6	1.7
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 1.1 SAAR: 4.5	2.3
Japan	QOQ: 0.4 SAAR: 1.4	2.2
China	2.3	7.9
Euro Area	0.2	-0.3
Germany	0.3	0.8
France	-0.1	0.3
Italy	0.1	-1.4
UK	0.7	1.6
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 0.9 SAAR: 3.5	3.1
Japan	QOQ: -0.3 SAAR: -1.2	2.3
China	1.8	7.6
Euro Area	0.3	0.4
Germany	0.4	1.0
France	0.3	0.8
Italy	0.0	-0.8
UK	0.4	2.4
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.5 SAAR -2.1	1.9
Japan	QOQ: 1.3 SAAR: 5.1	2.4
China	1.6	7.4
Euro Area	0.3	1.1
Germany	0.8	2.6
France	0.0	0.8
Italy	-0.1	-0.1
UK	0.7	2.5
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.1 SAAR 4.6	2.6
Japan	QOQ: -1.6 SAAR: -6.4	-0.3
China	1.9	7.5
Euro Area	0.1	0.8
Germany	-0.1	1.0
France	-0.1	0.0
Italy	-0.2	-0.3
UK	0.8	2.6
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.2 SAAR: 5.0	2.7
Japan	QOQ: -0.7 SAAR: -2.6	-1.4
China	1.9	7.3
Euro Area	0.2	0.8
Germany	0.1	1.2
France	0.3	0.4
Italy	-0.1	-0.5
UK	0.7	2.5
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.5 SAAR: 2.2	2.4
Japan	QOQ: 0.4 SAAR: 1.5	-0.8
China	1.5	7.3
Euro Area	0.3	0.9
Germany	0.7	1.6
France	0.1	0.2
Italy	0.0	-0.5
UK	0.5	2.7

QOQ: Quarter relative to prior quarter; SAAR: seasonally adjusted annual rate

Source: Country Statistical Agencies http://www.census.gov/aboutus/stat_int.html

Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP.

• Japan. Japan provides the most worrisome data (http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/06/valuation-risks-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html and earlier http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html and earlier http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations_8763.html http://cmpass ocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html and earlier http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html and earlier http://cmpassocregulationblog.blogspot.com/2013/06/paring-quantitative-easing-policy-and_4699.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2013/03/united-states-commercial-banks-assets.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real_25.html and for GDP http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html and earlier http://cmpassocreulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). In Jan 2015, Japan’s exports increased 17.0 percent in 12 months while imports decreased 9.0 percent. The second part of Table V-4 shows that net trade deducted 1.4 percentage points from Japan’s growth of GDP in IIQ2012, deducted 1.9 percentage points from GDP growth in IIIQ2012 and deducted 0.4 percentage points from GDP growth in IVQ2012. Net trade added 0.3 percentage points to GDP growth in IQ2012, 1.6 percentage points in IQ2013 and 0.2 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.5 percentage points from GDP growth in Japan. Net trade ducted 2.1 percentage points from GDP growth in Japan in IVQ2013. Net trade deducted 1.2 percentage point from GDP growth of Japan in IQ2014. Net trade added 4.2 percentage points to GDP growth in IIQ2014. Net trade added 0.2 percentage points to GDP growth in IIIQ2014 and added 0.9 percentage points in IVQ2014.

• China. In Feb 2015, China exports increased 48.3 percent relative to a year earlier and imports decreased 20.5 percent.
• Germany. Germany’s exports decreased 2.1 percent in the month of Jan 2015 and decreased 0.6 percent in the 12 months ending in Jan 2015. Germany’s imports decreased 0.8 percent in the month of Jan 2015 and decreased 0.3 percent in the 12 months ending in Jan. Net trade contributed 0.8 percentage points to growth of GDP in IQ2012, contributed 0.4 percentage points in IIQ2012, contributed 0.3 percentage points in IIIQ2012, deducted 0.5 percentage points in IVQ2012, deducted 0.3 percentage points in IQ2013 and added 0.1 percentage points in IIQ2013. Net traded deducted 0.5 percentage points from Germany’s GDP growth in IIIQ2013 and added 0.5 percentage points to GDP growth in IVQ2013. Net trade deducted 0.1 percentage points from GDP growth in IQ2014. Net trade added 0.0 percentage points to GDP growth in IIQ2014 and added 0.4 percentage points in IIIQ2014. Net trade added 0.2 percentage points to GDP growth in IVQ2014.
• United Kingdom. Net trade contributed 0.7 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.7 percentage points from UK growth. Net trade contributed 0.1 percentage points to UK value added in IVQ2013. Net trade contributed 0.2 percentage points to UK value added in IQ2014 and 0.3 percentage points in IIQ2014. Net trade deducted 0.7 percentage points to GDP growth in IIIQ2014 and added 0.6 percentage points in IVQ2014.
• France. France’s exports decreased 2.5 percent in Jan 2015 while imports decreased 1.3 percent. France’s exports increased 1.3 percent in the 12 months ending in Jan 2015 and imports decreased 3.1 percent relative to a year earlier. Net traded added 0.1 percentage points to France’s GDP in IIIQ2012 and 0.1 percentage points in IVQ2012. Net trade deducted 0.1 percentage points from France’s GDP growth in IQ2013 and added 0.3 percentage points in IIQ2013, deducting 1.7 percentage points in IIIQ2013. Net trade added 0.1 percentage points to France’s GDP in IVQ2013 and deducted 0.1 percentage points in IQ2014. Net trade deducted 0.2 percentage points from France’s GDP growth in IIQ2014 and deducted 0.2 percentage points in IIIQ2014. Net trade added 0.1 percentage points to France’s GDP growth in IVQ2014.
• United States. US exports decreased 2.9 percent in Jan 2015 and goods exports decreased 4.7 percent in Jan 2015 relative to a year earlier. Imports decreased 3.9 percent in Jan 2015 and goods imports decreased 2.9 percent in Jan 2015 relative to a year earlier. Net trade deducted 0.04 percentage points from GDP growth in IIQ2012 and added 0.39 percentage points in IIIQ2012 and 0.79 percentage points in IVQ2012. Net trade deducted 0.08 percentage points from US GDP growth in IQ2013 and deducted 0.54 percentage points in IIQ2013. Net traded added 0.59 percentage points to US GDP growth in IIIQ2013. Net trade added 1.08 percentage points to US GDP growth in IVQ2013. Net trade deducted 1.66 percentage points from US GDP growth in IQ2014 and deducted 0.34 percentage points in IIQ2014. Net trade added 0.78 percentage points to IIIQ2014. Net trade deducted 1.15 percentage points from GDP growth in IVQ2014. Industrial production increased 0.2 percent in Jan 2015 and decreased 0.3 percent in Dec 2014 after increasing 1.1 percent in Nov 2014. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production increased 0.2 percent in January after decreasing 0.3 percent in December. The rates of change in output for September through December are all slightly lower than previously published; even so, production is estimated to have advanced at an annual rate of 4.3 percent in the fourth quarter of last year. In January, manufacturing output moved up 0.2 percent and was 5.6 percent above its year-earlier level. The index for mining decreased 1.0 percent, with the decline more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities. The output of utilities increased 2.3 percent. At 106.2 percent of its 2007 average, total industrial production in January was 4.8 percent above its level of a year earlier. Capacity utilization for the industrial sector was unchanged in January at 79.4 percent, a rate that is 0.7 percentage point below its long-run (1972–2014) average.”

In the six months ending in Jan 2015, United States national industrial production accumulated increase of 1.6 percent at the annual equivalent rate of 3.2 percent, which is lower than growth of 4.8 percent in the 12 months ending in Jan 2015. Excluding growth of 1.1 percent in Nov 2014, growth in the remaining five months from Aug 2014 to Jan 2015 accumulated to 0.5 percent or 1.2 percent annual equivalent. Industrial production declined in two of the past six months. Industrial production expanded at annual equivalent 4.1 percent in the most recent quarter from Nov 2014 to Jan 2015 and at 2.4 percent in the prior quarter Aug to Oct 2014. Business equipment accumulated growth of 1.4 percent in the six months from Aug 2014 to Jan 2015 at the annual equivalent rate of 2.8 percent, which is lower than growth of 7.3 percent in the 12 months ending in Jan 2015. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for the industrial sector was unchanged in January at 79.4 percent, a rate that is 0.7 percentage point below its long-run (1972–2014) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and oscillating growth in past months.

Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 25.2 percent from the trough in Apr 2009 to Dec 2014. Manufacturing grew 24.2 percent from the trough in Apr 2009 to Jan 2015. Manufacturing output in Jan 2015 is 3.1 percent below the peak in Jun 2007. Growth at trend in the entire cycle from IVQ2007 to IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,126.4 billion than actual $16,311.6 billion. There are about two trillion dollars of GDP less than at trend, explaining the 28.3 million unemployed or underemployed equivalent to actual unemployment of 16.5 percent of the effective labor force (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/fluctuating-valuations-of-risk.html). US GDP in IVQ2014 is 11.5 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,311.6 billion in IVQ2014 or 8.8 percent at the average annual equivalent rate of 1.2 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Jan 1919 to Jan 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 124.8993 in Jan 2015. The actual index NSA in Jan 2015 is 99.8883, which is 20.0 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.3927 in Jan 2015. The output of manufacturing at 99.8883 in Jan 2015 is 14.9 percent below trend under this alternative calculation.

Table V-4, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	-2.9 Jan	-4.7 Jan	-3.9 Jan	-2.9 Jan
Japan		Jan 2015 17.0 Dec 12.9 Nov 4.9 Oct 9.6 Sep 6.9 Aug -1.3 Jul 3.9 Jun -2.0 May 2014 -2.7 Apr 2014 5.1 Mar 2014 1.8 Feb 2014 9.5 Jan 2014 9.5 Dec 2013 15.3 Nov 2013 18.4 Oct 2013 18.6 Sep 2013 11.5 Aug 2013 14.7 Jul 2013 12.2 Jun 2013 7.4 May 2013 10.1 Apr 2013 3.8 Mar 2013 1.1 Feb 2013 -2.9 Jan 2013 6.4 Dec -5.8 Nov -4.1 Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1		Jan 2015 -9.0 Dec 1.9 Nov -1.7 Oct 2.7 Sep 6.2 Aug -1.5 Jul 2.3 Jun 8.4 May 2014 -3.6 Apr 2013 3.4 Mar 2014 18.1 Feb 2014 9.0 Jan 2014 25.0 Dec 2013 24.7 Nov 2013 21.1 Oct 2013 26.1 Sep 2013 16.5 Aug 2013 16.0 Jul 2013 19.6 Jun 2013 11.8 May 2013 10.0 Apr 2013 9.4 Mar 2013 5.5 Feb 2013 7.3 Jan 2013 7.3 Dec 1.9 Nov 0.8 Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China		2015 48.3 Feb -3.3 Jan 2014 9.7 Dec 4.7 Nov 11.6 Oct 15.3 Sep 9.4 Aug 14.5 Jul 7.2 Jun 7.0 May 0.9 Apr -6.6 Mar -18.1 Feb 10.6 Jan 2013 4.3 Dec 12.7 Nov 5.6 Oct -0.3 Sep 7.2 Aug 5.1 Jul -3.1 Jun 1.0 May 14.7 Apr 10.0 Mar 21.8 Feb 25.0 Jan		2015 -20.5 Feb -19.9 Jan 2014 -2.4 Dec -6.7 Nov 4.6 Oct 7.0 Sep -2.4 Aug -1.6 Jul 5.5 Jun -1.6 May -0.8 Apr -11.3 Mar 10.1 Feb 10.0 Jan 2013 8.3 Dec 5.3 Nov 7.6 Oct 7.4 Sep 7.0 Aug 10.9 Jul -0.7 Jun -0.3 May 16.8 Apr 14.1 Mar -15.2 Feb 28.8 Jan
Euro Area	8.0 12-M Dec	2.4 Jan-Dec	1.0 12-M Dec	0.1 Jan-Dec
Germany	-2.1 Jan CSA	-0.6 Jan	-0.8 Jan CSA	-0.3 Jan
France Jan	-2.5	1.3	-1.3	-3.1
Italy Dec	2.6	6.3	-1.6	-1.3
UK	-0.2 Dec	-0.1 Oct-Dec 14 /Oct-Dec 13	-2.2 Dec	-2.2 Oct-Dec 14/Oct-Dec 13
Net Trade % Points GDP Growth	% Points
USA	IVQ2014 -1.15 IIIQ2014 0.78 IIQ2014 -0.34 IQ2014 -1.66 IVQ2013 1.08 IIIQ2013 0.59 IIQ2013 -0.54 IQ2013 -0.08 IVQ2012 +0.79 IIIQ2012 0.39 IIQ2012 -0.04 IQ2012 -0.11
Japan	0.3 IQ2012 -1.4 IIQ2012 -1.9 IIIQ2012 -0.4 IVQ2012 1.6 IQ2013 0.2 IIQ2013 -1.5 IIIQ2013 -2.1 IVQ2013 -1.2 IQ2014 4.2 IIQ2014 0.2 IIIQ2014 0.9 IVQ2014
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.3 IIQ2013 0.1 IIIQ2013 -0.5 IVQ2013 0.5 IQ2014 -0.1 IIQ2014 0.0 IIIQ2014 0.4 IVQ2014 0.2
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.3 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 -0.1 IQ2014 -0.2 IIQ2014 -0.2 IIIQ2014 0.1 IVQ2014
UK	0.7 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 0.2 IQ2014 0.3 IIQ2014 -0.7 IIIQ2014 0.6 IVQ2014

Sources: Country Statistical Agencies http://www.census.gov/foreign-trade/

The geographical breakdown of exports and imports of Japan with selected regions and countries is in Table VB-5 for Jan 2015. The share of Asia in Japan’s trade is close to one-half for 53.9 percent of exports and 48.7 percent of imports. Within Asia, exports to China are 17.0 percent of total exports and imports from China 24.3 percent of total imports. While exports to China increased 20.8 percent in the 12 months ending in Jan 2015, imports from China decreased 6.9 percent. The largest export market for Japan in Jan 2015 is the US with share of 19.4 percent of total exports, which is close to that of China, and share of imports from the US of 8.8 percent in total imports. Japan’s exports to the US increased 16.5 percent in the 12 months ending in Jan 2015 and imports from the US decreased 1.4 percent. Western Europe has share of 10.9 percent in Japan’s exports and of 10.1 percent in imports. Rates of growth of exports of Japan in Jan 2015 are 16.5 percent for exports to the US, 6.6 percent for exports to Brazil and 0.4 percent for exports to Germany. Comparisons relative to 2011 may have some bias because of the effects of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Deceleration of growth in China and the US and threat of recession in Europe can reduce world trade and economic activity. Growth rates of imports in the 12 months ending in Jan 2015 are mixed. Imports from Asia decreased 3.0 percent in the 12 months ending in Jan 2015 while imports from China decreased 3.0 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD).

Table VB-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yen

Jan 2015	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,144,713	17.0	7,322,176	-9.0
Asia	3,314,119 % Total 53.9	22.7	3,562,992 % Total 48.7	-3.0
China	1,041,905 % Total 17.0	20.8	1,778,299 % Total 24.3	-6.9
USA	1,192,663 % Total 19.4	16.5	647,255 % Total 8.8	-1.4
Canada	78,303	20.8	93,241	5.2
Brazil	40,584	6.6	86,272	-14.3
Mexico	87,868	21.2	38,506	7.0
Western Europe	671,916 % Total 10.9	8.2	741,708 % Total 10.1	-3.3
Germany	160,392	0.4	208,587	-8.8
France	48,630	-0.4	98,481	-0.5
UK	115,715	31.7	59,238	10.2
Middle East	216,735	6.1	1,022,772	-38.3
Australia	115,777	5.1	467,520	-1.9

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

World trade projections of the IMF are in Table V-6. There is increasing growth of the volume of world trade of goods and services from 3.0 percent in 2013 to 5.0 percent in 2015 and 5.6 percent on average from 2016 to 2019. World trade would be slower for advanced economies while emerging and developing economies (EMDE) experience faster growth. World economic slowdown would be more challenging with lower growth of world trade.

Table V-6, IMF, Projections of World Trade, USD Billions, USD/Barrel and Annual ∆%

	2013	2014	2015	Average ∆% 2016-2019
World Trade Volume (Goods and Services)	3.0	3.8	5.0	5.6
Exports Goods & Services	3.2	3.7	5.0	5.5
Imports Goods & Services	2.8	3.9	5.0	5.6
World Trade Value of Exports Goods & Services USD Billion	23,114	23,928	24,948	Average ∆% 2006-2015 20,259
Value of Exports of Goods USD Billion	18,671	19,299	20,107	Average ∆% 2006-2015 16,312
Average Oil Price USD/Barrel	104.07	102.76	99.36	Average ∆% 2006-2015 88.85
Average Annual ∆% Export Unit Value of Manufactures	-1.1	-0.2	-0.5	Average ∆% 2006-2015 -0.6
Exports of Goods & Services	2013	2014	2015	Average ∆% 2016-2019
Euro Area	1.8	3.5	4.3	4.7
EMDE	4.4	3.9	5.8	6.1
G7	1.8	2.9	4.2	4.9
Imports Goods & Services
Euro Area	0.5	3.4	3.9	4.7
EMDE	5.3	4.4	6.1	6.3
G7	1.2	3.6	4.1	4.9
Terms of Trade of Goods & Services
Euro Area	0.8	-0.4	-0.3	-0.1
EMDE	-0.2	-0.02	-0.6	-0.4
G7	0.8	0.7	-0.2	0.0
Terms of Trade of Goods
Euro Area	1.2	0.03	-0.02	-0.2
EMDE	-0.2	0.2	-0.4	-0.3
G7	0.9	0.3	-0.1	-0.1

Notes: Commodity Price Index includes Fuel and Non-fuel Prices; Commodity Industrial Inputs Price includes agricultural raw materials and metal prices; Oil price is average of WTI, Brent and Dubai

Source: International Monetary Fund World Economic Outlook databank

http://www.imf.org/external/ns/cs.aspx?id=28

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, increased to 53.9 in Feb from 53.0 in Jan, indicating expansion at slightly higher rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/febc72758d7e4f4da8961c17c008d1f9). This index has remained above the contraction territory of 50.0 during 67 consecutive months. The employment index did not change from 51.7 in Jan to 51.7 in Feb with input prices rising at faster rate, new orders increasing at faster rate and output increasing at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/febc72758d7e4f4da8961c17c008d1f9). David Hensley, Director of Global Economic Coordination at JP Morgan, finds moderate acceleration of world economic growth in IQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/febc72758d7e4f4da8961c17c008d1f9). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased to 52.0 in Feb from 51.7 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/e58af6424edc4dfeb2fe8b62b2a84ca6). New export orders expanded for the nineteenth consecutive month. David Hensley, Director of Global Economics Coordination at JP Morgan Chase, finds continuing growth in global manufacturing with output increasing at around annual seasonally adjusted 4.0 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/e58af6424edc4dfeb2fe8b62b2a84ca6). The HSBC Brazil Composite Output Index, compiled by Markit, increased from 49.2 in Jan to 51.3 in Feb, indicating moderate contraction in activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/e3331afa76fc4a1bb68dc6331473ddb0). The HSBC Brazil Services Business Activity index, compiled by Markit, increased from 48.4 in Jan to 52.3 in Feb, indicating stronger services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/e3331afa76fc4a1bb68dc6331473ddb0). Pollyana De Lima, Economist at Markit, finds stronger services activity with uncertanties (http://www.markiteconomics.com/Survey/PressRelease.mvc/e3331afa76fc4a1bb68dc6331473ddb0). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 50.7 in Jan to 49.6 in Feb, indicating moderate deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/a3de289a55704217948d1da667940e14). Paul Smith, Economist at Markit, finds stagnation and cost-push pressures perhaps because of currency depreciation (http://www.markiteconomics.com/Survey/PressRelease.mvc/76ee5ab696c44271ac7eaa6e6da02cea).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 54.3 in Feb from 53.9 in Jan (http://www.markiteconomics.com/Survey/PressRelease.mvc/76d54ef7fac944e6a41abf20258b097f). New export orders softened. Chris Williamson, Chief Economist at Markit, finds that manufacturing provides strong contribution to economic growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/76d54ef7fac944e6a41abf20258b097f). The Markit Flash US Services PMI™ Business Activity Index increased from 54.0 in Jan to 57.0 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/2a607041731a438ab26c3eff9bf6bd5f). The Markit Flash US Composite PMI™ Output Index increased from 54.4 in Jan to 56.8 in Feb. Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with growth of GDP around 3.0 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/2a607041731a438ab26c3eff9bf6bd5f). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 57.2 in Feb from 54.4 in Jan (http://www.markiteconomics.com/Survey/PressRelease.mvc/de457cc1d40b4f0182e3e9adca09f723). The Markit US Services PMI™ Business Activity Index increased from 54.2 in Jan to 57.1 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/de457cc1d40b4f0182e3e9adca09f723). Chris Williamson, Chief Economist at Markit, finds the indexes consistent with US growth at around 2.2 percent annual in IQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/de457cc1d40b4f0182e3e9adca09f723). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 55.1 in Feb from 53.9 in Jan, which indicates expansion at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/c79b0b20c18a4644aebaddcf853fe976). New foreign orders expanded at moderate rate. Chris Williamson, Chief Economist at Markit, finds that the index suggests strong manufacturing growing at around annual 4.0 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/c79b0b20c18a4644aebaddcf853fe976). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 0.6 percentage points from 53.5 in Jan to 52.9 in Feb, which indicates growth at slower rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=29038). The index of new orders decreased 0.4 percentage points from 52.9 in Jan to 52.5 in Feb. The index of new export orders decreased 1.0 percentage points from 49.5 in Jan to 48.5 in Feb, contracting at faster rate. The Non-Manufacturing ISM Report on Business^® PMI increased 0.2 percentage points from 56.7 in Jan to 56.9 in Feb, indicating growth of business activity/production during 67 consecutive months, while the index of new orders decreased 2.8 percentage points from 59.5 in Jan to 56.7 in Feb (http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=29043). Table USA provides the country economic indicators for the US.

Table USA, US Economic Indicators

Consumer Price Index	Jan 12 months NSA ∆%: -0.1; ex food and energy ∆%: 1.6 Jan month SA ∆%: -0.7; ex food and energy ∆%: 0.2 Blog 3/1/15
Producer Price Index	Finished Goods Jan 12-month NSA ∆%: -3.1; ex food and energy ∆% 1.5 Jan month SA ∆% = -2.1; ex food and energy ∆%: 0.2 Final Demand Jan 12-month NSA ∆%: 0.0; ex food and energy ∆% 1.6 Jan month SA ∆% = -0.8; ex food and energy ∆%: -0.1 Blog 2/22/15 3/1/15
PCE Inflation	Jan 12-month NSA ∆%: headline 0.2; ex food and energy ∆% 1.3 Blog 3/8/15
Employment Situation	Household Survey: Jan Unemployment Rate SA 5.5% Blog calculation People in Job Stress Feb: 27.2 million NSA, 16.5% of Labor Force Establishment Survey: Feb Nonfarm Jobs +295,000; Private +288,000 jobs created  Jan 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.3 Blog 3/8/15
Nonfarm Hiring	Nonfarm Hiring fell from 63.3 million in 2006 to 54.2 million in 2013 or by 9.1 million and to 58.7 million in 2014 or by 4.6 million Private-Sector Hiring Jan 2015 4.464 million million lower by 0.326 million than 4.790 million in Jan 2006 Blog 3/15/15
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.6 IIQ2012/IIQ2011 2.3 IIIQ2012/IIIQ2011 2.7 IVQ2012/IVQ2011 1.6 IQ2013/IQ2012 1.7 IIQ2013/IIQ2012 1.8 IIIQ2013/IIIQ2012 2.3 IVQ2013/IVQ2012 3.1 IQ2014/IQ2013 1.9 IIQ2014/IIQ2013 2.6 IIIQ2014/IIIQ2013 2.7 IVQ2014/IVQ2013 2.4 IQ2012 SAAR 2.3 IIQ2012 SAAR 1.6 IIIQ2012 SAAR 2.5 IVQ2012 SAAR 0.1 IQ2013 SAAR 2.7 IIQ2013 SAAR 1.8 IIIQ2013 SAAR 4.5 IVQ2013 SAAR 3.5 IQ2014 SAAR -2.1 IIQ2014 SAAR 4.6 IIIQ2014 SAAR 5.0 IVQ2014 SAAR 2.2 Blog 3/1/15
Real Private Fixed Investment	SAAR IVQ2014 4.5 ∆% IVQ2007 to IVQ2014: 3.3% Blog 3/1/15
Corporate Profits	IIIQ2014 SAAR: Corporate Profits 3.1; Undistributed Profits 12.4 Blog 12/28/14
Personal Income and Consumption	Jan month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.9 Real Personal Consumption Expenditures (RPCE): 0.3 12-month Jan NSA ∆%: RDPI: 4.2; RPCE ∆%: 3.4 Blog 3/8/15
Quarterly Services Report	IIIQ14/IIIQ13 NSA ∆%: Information 6.6 Financial & Insurance 4.8 Blog 12/14/14
Employment Cost Index	Compensation Private IVQ2014 SA ∆%: 0.6 Dec 12 months ∆%: 2.3 Blog 2/1/15
Industrial Production	Jan month SA ∆%: 0.2 Jan 12 months SA ∆%: 4.8 Manufacturing Jan SA 0.2 ∆% Jan 12 months SA ∆% 5.6, NSA 5.5 Capacity Utilization: 79.4 Blog 2/22/15
Productivity and Costs	Nonfarm Business Productivity IVQ2014∆% SAAE -2.2; IVQ2014/IVQ2013 ∆% -0.1; Unit Labor Costs SAAE IVQ2014 ∆% 4.1; IVQ2014/IVQ2013 ∆%: 2.6 Blog 3/8/15
New York Fed Manufacturing Index	General Business Conditions From Jan 9.95 to Feb 7.78 New Orders: From Jan 6.09 to Feb 1.22 Blog 2/22/15
Philadelphia Fed Business Outlook Index	General Index from Jan 6.3 to Feb 5.2 New Orders from Jan 8.5 to Feb 5.4 Blog 2/22/15
Manufacturing Shipments and Orders	New Orders SA Jan ∆% -0.2 Ex Transport -1.8 Jan NSA New Orders ∆% minus 4.9 Ex transport minus 6.1 Blog 3/8/15
Durable Goods	Jan New Orders SA ∆%: minus 2.8; ex transport ∆%: minus 0.3 Jan 15/Jan 14 New Orders NSA ∆%: 1.6; ex transport ∆% 1.5 Blog 3/1/15
Sales of New Motor Vehicles	Feb 2015 2,408,742; Jan 2014 2,206.454. Feb 15 SAAR 16.66 million, Jan 15 SAAR 16.92 million, Feb 2015 SAAR 15.41 million Blog 3/8/15
Sales of Merchant Wholesalers	Jan 2015/Jan 2014 NSA ∆%: Total -3.8; Durable Goods: 2.9; Nondurable Goods: -9.3 Blog 3/15/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jan 15 12-M NSA ∆%: Sales Total Business -2.2; Manufacturers -4.1 Retailers 2.3; Merchant Wholesalers -3.8 Blog 3/15/15
Sales for Retail and Food Services	Jan-Feb 2015/Jan-Feb 2014 ∆%: Retail and Food Services 2.3; Retail ∆% 1.4 Blog 3/15/15
Value of Construction Put in Place	Jan SAAR month SA ∆%: minus 1.1 Jan 12-month NSA:1.2 Blog 3/8/15
Case-Shiller Home Prices	Dec 2014/ Dec 2013 ∆% NSA: 10 Cities 4.3; 20 Cities: 4.5; National: 4.6 ∆% Dec SA: 10 Cities 0.8 ; 20 Cities: 0.9 Blog 3/1/15
FHFA House Price Index Purchases Only	Dec SA ∆% 0.8; 12 month NSA ∆%: 5.5 Blog 3/1/15
New House Sales	Jan 2014 month SAAR ∆%: minus 0.2 Jan 2014/Jan 2013 NSA ∆%: 9.1 Blog 3/1/15
Housing Starts and Permits	Jan Starts month SA ∆% -2.0; Permits ∆%: -0.7 Jan 2015/Jan 2014 NSA ∆% Starts 18.3; Permits  ∆% 4.2 Blog 2/22/15
Trade Balance	Balance Jan SA -$41,752 million versus Dec -$45,601 million Exports Jan SA ∆%: -2.9 Imports Jan SA ∆%: -3.9 Goods Exports Jan 2015/Jan 2014 NSA ∆%: -4.7 Goods Imports Jan 2015/Jan 2014 NSA ∆%: -2.9 Blog 3/15/15
Export and Import Prices	Feb 12-month NSA ∆%: Imports -9.4; Exports -5.9 Blog 3/15/15
Consumer Credit	Jan ∆% annual rate: Total 4.2; Revolving -1.6; Nonrevolving 6.3 Blog 3/15/15
Net Foreign Purchases of Long-term Treasury Securities	Dec Net Foreign Purchases of Long-term US Securities: $35.4 billion Major Holders of Treasury Securities: China $1244 billion; Japan $1231 billion; Total Foreign US Treasury Holdings Jan $6154 billion Blog 2/22/15
Treasury Budget	Fiscal Year 2015/2014 ∆% Feb: Receipts 7.1; Outlays 6.0; Individual Income Taxes 8.1 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Deficit Fiscal Year 2014 $483 billion Blog 3/15/2015
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt $11,281 B 70.4% GDP 2013 Deficit $680 B, 4.1% GDP Debt $11,983 B 72.3% GDP 2014 Deficit $483 B 2.8% GDP Debt $12,779 B 74.1% GDP 2025 Deficit $1,088B, 4.0% GDP Debt $21,605B 78.7% GDP 2039: Long-term Debt/GDP 106% Blog 8/26/12 11/18/12 2/10/13 9/22/13 2/16/14 8/24/14 9/14/14 3/1/15
Commercial Banks Assets and Liabilities	Dec 2014 SAAR ∆%: Securities 24.2 Loans 7.1 Cash Assets -52.4 Deposits 7.6 Blog 1/25/15
Flow of Funds Net Worth of Families and Nonprofits	IIIQ2014 ∆ since 2007 Assets +$14,260.8 BN Nonfinancial $477.8 BN Real estate -$1,215.2 BN Financial +13,783.0 BN Net Worth +$14,595.3 BN Blog 12/28/14
Current Account Balance of Payments	IIIQ2014 -202,280 MM % GDP 2.3 Blog 12/21/14
Collapse of United States Dynamism of Income Growth and Employment Creation	Blog 1/25/15

Links to blog comments in Table USA:

3/8/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html

3/1/15 http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html

2/22/15 http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html

2/1/15 http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html

1/25/15 http://cmpassocregulationblog.blogspot.com/2015/01/competitive-currency-conflicts-world.html

12/28/14 http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html

12/21/14 http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html

12/14/14 http://cmpassocregulationblog.blogspot.com/2014/12/global-financial-and-economic-risk.html

12/7/14 http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html

9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html

8/24/14 http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html

8/3/14 http://cmpassocregulationblog.blogspot.com/2014/08/fluctuating-financial-valuations.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

9/22/13 http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html

2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html

Sales of manufacturers decreased 2.0 percent in Jan 2015 after decreasing 0.9 percent in Dec and decreasing 4.1 percent in the 12 months ending in Jan, as shown in Table VA-1. Retailers’ sales decreased 0.9 percent in Jan 2015 after decreasing 1.1 percent in Dec and increased 2.3 percent in 12 months ending in Jan 2015. Sales of merchant wholesalers decreased 3.1 percent in Jan, decreased 0.9 percent in Dec and decreased 3.8 percent in 12 months ending in Jan. Sales of total business decreased 2.0 percent in Jan after decreasing 1.0 percent in Dec and decreased 2.2 percent in 12 months.

Table VA-1, US, Percentage Changes for Sales of Manufacturers, Retailers and Merchant Wholesalers

	Jan 15/Dec 14 ∆% SA	Jan 2015 Millions of Dollars NSA	Dec 14/ Nov 14  ∆% SA	Jan 15/ Jan 14 ∆% NSA
Total Business	-2.0	1,194,994	-1.0	-2.2
Manufacturers	-2.0	437,582	-0.9	-4.1
Retailers	-0.9	353,504	-1.1	2.3
Merchant Wholesalers	-3.1	403,980	-0.9	-3.8

Source: US Census Bureau http://www.census.gov/mtis/

Chart VA-1 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. The series with adjustment evens fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is stability in the final segment with subdued prices with data not adjusted for price changes.

Chart VA-1, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Jan 2015

US Census Bureau http://www.census.gov/mtis/

Chart VA-2 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers not seasonally adjusted (NSA) in millions of dollars. The series without adjustment shows sharp jagged behavior because of monthly fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is stability in the final segment with monthly marginal weakness in data without adjustment for price changes.

Chart VA-2, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Jan 2015

US Census Bureau

http://www.census.gov/mtis/

Businesses added cautiously to inventories to replenish stocks. Retailers’ inventories changed 0.0 percent in Jan 2015 and increased 0.5 percent in Dec with growth of 2.4 percent in 12 months, as shown in Table VA-2. Total business changed inventories by 0.0 percent in Jan, 0.0 percent in Dec and increased 3.3 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.30 under careful management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.

Table VA-2, US, Percentage Changes for Inventories of Manufacturers, Retailers and Merchant Wholesalers and Inventory/Sales Ratios

Inventory Change	Jan 15 Millions of Dollars NSA	Jan 15/ Dec 14 ∆% SA	Dec 14/  Nov 14 ∆% SA	Jan 15/ Jan 14 ∆% NSA
Total Business	1,756,037	0.0	0.0	3.3
Manufacturers	647,507	-0.4	-0.4	1.9
Retailers	555,358	0.0	0.5	2.4
Merchant Wholesalers	553,172	0.3	0.0	6.1
Inventory/ Sales Ratio	Dec 14 Millions of Dollars NSA	Nov 2014 SA	Oct 2014 SA	Sep 2013 SA
Total Business	1,756,037	1.35	1.33	1.30
Manufacturers	647,507	1.36	1.34	1.30
Retailers	555,358	1.44	1.43	1.45
Merchant Wholesalers	553,172	1.27	1.22	1.18

US Census Bureau

http://www.census.gov/mtis/

Chart VA-3 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Jan 2015. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Inventories have surpassed the peak before the global recession. Data are not adjusted for price changes.

Chart VA-3, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Jan 2015

US Census Bureau http://www.census.gov/mtis/

Chart VA-4 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Jan 2015 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions. Total business inventories are higher than in the peak before the global recession.

Chart VA-4, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Jan 2015

US Census Bureau http://www.census.gov/mtis/

Inventories follow business cycles. When recession hits sales inventories pile up, declining with expansion of the economy. In a fascinating classic opus, Lloyd Meltzer (1941, 129) concludes:

“The dynamic sequences (i) through (6) were intended to show what types of behavior are possible for a system containing a sales output lag. The following conclusions seem to be the most important:

(i) An economy in which business men attempt to recoup inventory losses will always undergo cyclical fluctuations when equilibrium is disturbed, provided the economy is stable.

This is the pure inventory cycle.

(2) The assumption of stability imposes severe limitations upon the possible size of the marginal propensity to consume, particularly if the coefficient of expectation is positive.

(3) The inventory accelerator is a more powerful de-stabilizer than the ordinary acceleration principle. The difference in stability conditions is due to the fact that the former allows for replacement demand whereas the usual analytical formulation of the latter does not. Thus, for inventories, replacement demand acts as a de-stabilizer. Whether it does so for all types of capital goods is a moot question, but I believe cases may occur in which it does not.

(4) Investment for inventory purposes cannot alter the equilibrium of income, which depends only upon the propensity to consume and the amount of non-induced investment.

(5) The apparent instability of a system containing both an accelerator and a coefficient of expectation makes further investigation of possible stabilizers highly desirable.”

Chart VA-5 shows the increase in the inventory/sales ratios during the recession of 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012, 2013, 2014 and 2015 with increase into 2015.

Chart VA-5, Total Business Inventories/Sales Ratios 2005 to 2015

Source: US Census Bureau

http://www2.census.gov/mtis/historical/img/mtisbrf.gif

Sales and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-3 for Jan 2015 NSA and percentage changes from the prior month SA and for Jan 2015 relative to Jan 2014. These data are volatile, aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US fell 3.8 percent in Jan 2015 relative to Jan 2014 and decreased 3.1 percent in Jan 2015 relative to Dec 2014. The value of total sales is quite high at $403.9 billion, approaching five trillion dollars in a year. Value in the breakdown is useful in identifying relative importance of individual categories. Sales of durable goods in Jan 2015 reached $194.7 billion, over two trillion dollars for a year, decreasing 1.4 percent in Jan 2015 relative to Dec 2014 and increasing 2.9 percent in Jan 2015 relative to Jan 2014. Sales of automotive products reached $32.9 billion in Jan 2015, increasing 2.5 percent in the month and increasing 7.1 percent relative to a year earlier with declining gasoline prices. There is strong performance of 2.1 percent in machinery but higher of 5.8 percent in electrical products. Sales of nondurable goods fell 9.3 percent over a year earlier. The influence of commodity prices returned as suggested by decrease of 2.9 percent in Jan 2015 and decrease of 10.6 percent in Jan 2015 relative to a year earlier in farm products with decrease of 13.5 percent in petroleum products in Jan 2015 and decrease of 38.9 percent relative to a year earlier. The final three columns in Table VA-5 provide the value of inventories and percentage changes from the prior month and relative to the same month a year earlier. US total inventories of wholesalers increased 0.3 percent in Jan 2015 and increased 6.1 percent relative to a year earlier. Inventories of durable goods of $339.6 billion are 61.4 percent of total inventories of $553.2 billion and rose 7.8 percent relative to a year earlier. Automotive inventories increased 8.7 percent relative to a year earlier. Machinery inventories of $98.5 billion rose 6.7 percent relative to a year earlier. Inventories of nondurable goods of $213.6 billion are 38.6 percent of the total and increased 3.6 percent relative to a year earlier. Inventories of farm products decreased 4.6 percent in Jan relative to Dec and decreased 5.2 percent relative to a year earlier. Inventories of petroleum products decreased 1.1 percent in Jan and decreased 21.5 percent relative to a year earlier.

Table VA-3, US, Sales and Inventories of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, Month ∆%

2015	Sales $ Billions Jan 2015 NSA	Sales Jan ∆% SA	Sales∆% Jan 2015 from Jan 2014  NSA	INV $ Billions Jan 2015 NSA	INV Jan 2015 ∆% SA	INV  ∆% Jan 2015 from Jan 2014 NSA
US Total	403.9	-3.1	-3.8	553.2	0.3	6.1
Durable	194.7	-1.4	2.9	339.6	0.6	7.8
Automotive	32.9	2.5	7.1	56.9	1.6	8.7
Prof. Equip.	36.7	0.6	3.9	43.7	0.2	9.7
Computer Equipment	20.5	1.3	2.0	19.1	-1.1	12.2
Electrical	35.5	-4.4	5.8	38.2	2.4	10.1
Machinery	35.8	-0.9	2.1	98.5	0.2	6.7
Not Durable	209.3	-4.6	-9.3	213.6	-0.1	3.6
Drugs	42.4	-3.6	9.4	47.5	1.7	18.8
Apparel	11.8	-0.6	5.5	25.9	1.1	5.8
Groceries	50.1	-1.3	3.8	35.3	0.3	7.0
Farm Products	20.0	-2.9	-10.6	25.7	-4.6	-5.2
Petroleum	39.8	-13.5	-38.9	16.2	-1.1	-21.5

Note: INV: inventories

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Chart VA-6 of the US Census Bureau provides sales of wholesale trade NSA from Jan 1992 to Jan 2015. The jagged curve of wholesale trade sales without adjustment shows strong seasonal variations. There is a strong long-term trend interrupted by sharp drop during the global recession. Growth resumed along a stronger upward trend and the level surpasses the peak before the global recession with stability in the final segment.

Chart VA-6, US, Wholesale Trade Sales, Monthly, NSA, Jan 1992-Jan 2015, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Chart VA-7 of the US Census Bureau provides US wholesale trade sales with seasonal adjustment from Jan 1992 to Jan 2015. The elimination of seasonality permits enhanced comparison of adjacent sales. The final segment identifies another drop followed by increase to a higher level with stability.

Chart VA-7, US, Wholesale Trade Sales, Monthly, SA, Jan 1992-Jan 2015, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Inventory/sales ratios of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-4. The total for the US has increased moderately at 1.27 in Jan 2015, 1.22 in Dec 2014 and 1.18 in Jan 2014. Inventory/sales ratios are higher in durable goods industries but remain relatively stable with 1.61 in Jan 2015, 1.58 in Dec 2014 and 1.58 in Jan 2014. Computer equipment operates with low inventory/sales ratios of 0.85 in Jan 2015, 0.88 in Dec 2014 and 0.79 in Jan 2014 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.94 in Jan 2015 and 0.89 in Dec 2014, which are close to 0.84 in Jan 2014. There are exceptions such as 1.93 in Jan 2015 in apparel that is close to 1.90 in Dec 2014 and close to 1.98 in Jan 2014.

Table VA-4, Inventory/Sales Ratios of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, % SA

	Jan 2015	Dec 2014	Jan 2014
US Total	1.27	1.22	1.18
Durable	1.61	1.58	1.58
Automotive	1.56	1.58	1.58
Prof. Equip.	1.08	1.09	1.05
Comp. Equip.	0.85	0.88	0.79
Electrical	1.01	0.95	1.00
Machinery	2.51	2.48	2.48
Not Durable	0.94	0.89	0.84
Drugs	1.12	1.06	1.08
Apparel	1.93	1.90	1.98
Groceries	0.67	0.66	0.66
Farm Products	1.06	1.08	1.04
Petroleum	0.39	0.34	0.31

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars NSA are provided in Chart VA-8 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession with recent downward turn followed by increase/stability.

Chart VA-8, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Jan 2015

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-9 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession with recent downward turn followed by increase.

Chart VA-9, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Jan 2015

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Chart VA-10 provides the chart of the US Census Bureau with inventories/sales ratios of merchant wholesalers from 2004 to 2014 seasonally adjusted. Inventory/sales ratios rise during contractions as merchants are caught with increasing inventories because of weak sales and fall during expansions as merchants attempt to fill sales with existing stocks. There is an increase in the inventory/sales ratio in 2012 but not yet significantly higher with declining trend in the final segment followed by an increase and new decline/stability. There is an increase from 2014 into 2015.

Chart VA-10, US, Monthly Inventories/Sales Ratios of Merchant Wholesalers, SA, 2005-2015

Source: US Census Bureau

http://www2.census.gov/wholesale/img/mwtsbrf.jpg

Sales of retail and food services decreased 0.6 percent in Feb 2015 after decreasing 0.8 percent in Jan 2014 seasonally adjusted (SA), growing 2.3 percent in Feb 2015 relative to Feb 2014 not seasonally adjusted (NSA), as shown in Table VA-5. Excluding motor vehicles and parts, retail sales decreased 0.1 percent in Feb 2015, decreasing 1.1 percent in Jan 2015 SA and increasing 0.9 percent NSA in Feb 2015 relative to a year earlier. Sales of motor vehicles and parts decreased 2.5 percent in Feb 2015 after increasing 0.5 percent in Jan 2015 SA and increasing 7.9 percent NSA in Feb 2015 relative to a year earlier. Gasoline station sales increased 1.5 percent SA in Feb 2015 after decreasing 9.8 percent in Jan 2015 in oscillating prices of gasoline that are moderating, decreasing 23.8 percent in Feb 2015 relative to a year earlier.

Table VA-5, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%

	Feb/Jan ∆% SA	Jan/Dec ∆% SA	Jan-Feb 2015 Million Dollars NSA	Jan-Feb 2015 from Jan-Feb 2014 ∆% NSA
Retail and Food Services	-0.6	-0.8	790,776	2.3
Excluding Motor Vehicles and Parts	-0.1	-1.1	628,361	0.9
Motor Vehicles & Parts Dealers	-2.5	0.5	162,415	7.9
Retail	-0.6	-0.9	697,494	1.4
Building Materials	-2.3	0.7	41,810	4.7
Food and Beverage	0.3	-0.2	108,241	3.7
Grocery	0.5	-0.3	97,340	3.4
Health & Personal Care Stores	-0.7	-0.3	49,305	5.0
Clothing & Clothing Accessories Stores	0.0	-0.6	34,243	3.2
Gasoline Stations	1.5	-9.8	62,480	-23.8
General Merchandise Stores	-1.2	0.1	97,835	2.4
Food Services & Drinking Places	-0.6	-0.2	93,282	9.6

Source: US Census Bureau http://www.census.gov/retail/

Chart VA-11 provides monthly percentage changes of sales of retail and food services. There is significant monthly volatility that prevents identification of clear trends.

Chart VA-11, US, Monthly Percentage Change of Retail and Food Services Sales, Jan 1992-Feb 2015

Source: US Census Bureau http://www.census.gov/retail/

Chart VA-12 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Feb 2015 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series followed by another increase/decrease. Data are not adjusted for price changes.

Chart VA-12, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Feb 2015, Millions of Dollars

Source: US Census Bureau http://www.census.gov/retail/

Chart VA-13 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Feb 2015. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level and stability followed by strong increase in the final segment. Sales decline in the last observation.

Chart VA-13, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Feb 2015, Millions of Dollars

Source: US Census Bureau http://www.census.gov/retail/

The report of consumer credit outstanding of the Board of Governors of the Federal Reserve System is provided in Table VA-6. The data are in seasonally adjusted annual rates both percentage changes and billions of dollars. The estimate of consumer credit “covers most short- and intermediate-term credit extended to individuals, excluding loans secured by real estate (http://www.federalreserve.gov/releases/g19/current/default.htm). Consumer credit is divided into two categories. (1) Revolving consumer credit (REV in Table VA-6) consists mainly of unsecured credit cards. (2) Non-revolving consumer credit (NREV in Table VA-6) “includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers or vacations” (http://www.federalreserve.gov/releases/g19/current/default.htm). In Jan 2015, revolving credit was $888 billion, or 26.7 percent of total consumer credit of $3328 billion, and non-revolving credit was $2440 billion, or 73.3 percent of total consumer credit outstanding. Consumer credit grew at relatively high rates before the recession beginning in IVQ2007 (Dec) and extending to IIQ2009 (Jun) as dated by the National Bureau of Economic Research or NBER (http://www.nber.org/cycles/cyclesmain.html). Percentage changes of consumer credit outstanding fell already in 2009. Rates were still negative in 2010 with decline of 1.0 percent in annual data and sharp decline of 7.6 percent in revolving credit. In IVQ 2013, total consumer credit grew at 5.4 percent with increase of revolving credit at 2.0 percent and increase of non-revolving credit at 6.7 percent. Growth continued in Jan 2015 with total credit at 4.2 percent, revolving at minus 1.6 percent and non-revolving at 4.2 percent.

Table VA-6, US, Consumer Credit Outstanding, SA, Annual Rate and Billions of Dollars

	Total ∆%	REV ∆%	NRV ∆%	Total $B	REV $B	NREV $B
2015
Jan	4.2	-1.6	6.3	3328	888	2440
2014
Dec	6.5	8.4	5.8	3316	889	2427
Nov	5.3	-0.7	7.5	3298	882	2416
IVQ	6.0	3.4	6.9	3316	889	2427
IIIQ	6.7	2.9	8.2	3268	882	2386
IIQ	8.2	6.3	9.0	3213	875	2338
IQ	6.5	1.8	8.3	3149	862	2287
2013
IVQ	5.4	2.0	6.7	3098	858	2240
2014	7.1	3.7	8.3	3316	889	2427
2013	6.0	1.3	7.9	3097	857	2240
2012	6.2	0.6	8.6	2924	847	2077
2011	4.1	0.2	5.9	2756	842	1914
2010	-1.0	-7.6	2.7	2647	840	1807
2009	-3.9	-8.8	-1.0	2553	917	1636
2008	1.3	0.2	2.0	2651	1005	1646
2007	5.9	8.5	4.3	2529	1008	1521

Note: REV: Revolving; NREV: Non-revolving; ∆%: simple annual rate from unrounded data; Total may not add exactly because of rounding

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g19/current/default.htm

Chart VA-14 of the Board of Governors of the Federal Reserve System provides total consumer credit outstanding in millions of dollars measured in the right axis and the finance rate on 24-month personal loans at commercial banks, not seasonally adjusted, measured on the left axis. There was sharp decline of total consumer loans outstanding during the global recession followed by strong recovery. There is long-term decline with fluctuations of the financing rate.

Chart VA-14, US, Total Consumer Credit Owned and Securitized NSA and Financing Rate on 24-month Personal Loans at Commercial Banks NSA, Millions of Dollars and Percent, Feb 1972-Jan 2015

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g19/current/default.htm

Chart VA-15 of the Board of Governors of the Federal Reserve System provides percentage changes of total consumer credit outstanding in the US and the financing rate on 24-month personal consumer loans at commercial banks, since 1972. The shaded bars are the cyclical contraction dates of the National Bureau of Economic Research (http://www.nber.org/cycles/cyclesmain.html). Consumer credit is cyclical, declining during contractions as shown by negative percentage changes during economic contractions. There is clear upward trend in 2012-2013 but with significant fluctuations and vacillation in the final segment.

Chart VA-15, US, Percent Change of Total Consumer Credit, Seasonally Adjusted at an Annual Rate and Finance Rate on 24-month Personal Loans at Commercial Banks NSA, Feb 1972-Jan 2015

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g19/current/default.htm

Table IIAI-2 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into four parts: Treasury budget in the 2015 fiscal year beginning on Oct 1, 2014 and ending on Sep 30, 2015; federal fiscal data for the years from 2009 to 2014; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2014. Receipts increased 7.1 percent in the cumulative fiscal year 2015 ending in Feb 2015 relative to the cumulative in fiscal year 2014. Individual income taxes increased 8.1 percent relative to the same fiscal period a year earlier. Outlays increased 6.0 percent relative to a year earlier. There are also receipts, outlays, deficit and debt for fiscal years 2013 and 2014. Total revenues of the US from 2009 to 2012 accumulate to $9021 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,109 billion, or $14.1 trillion, with the deficit accumulating to $5090 billion, or $5.1 trillion. Revenues decreased 6.5 percent from $9653 billion in the four years from 2005 to 2008 to $9021 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and also by growth of only 2.3 percent on average in the cyclical expansion from IIIQ2009 to IVQ2014. In contrast, the expansion from IQ1983 to IIQ1988 was at the average annual growth rate of 4.9 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html). Because of mediocre GDP growth, there are 27.2 million unemployed or underemployed in the United States for an effective unemployment/underemployment rate of 16.5 percent (http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). Weakness of growth and employment creation is analyzed in II Collapse of United States Dynamism of Income Growth and Employment Creation (http://cmpassocregulationblog.blogspot.com/2015/01/peaking-valuations-of-risk-financial.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,109 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.5 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5090 billion in 2009-2012. Federal revenue was 14.9 percent of GDP on average in the years from 2009 to 2012, which is well below 17.4 percent of GDP on average from 1965 to 2014. Federal outlays were 23.3 percent of GDP on average from 2009 to 2012, which is well above 20.1 percent of GDP on average from 1965 to 2014. The lower part of Table IIA1-2 shows that debt held by the public swelled from $5803 billion in 2008 to $12,779 billion in 2014, by $6976 billion or 120.2 percent. Debt held by the public as percent of GDP or economic activity jumped from 39.3 percent in 2008 to 74.1 percent in 2014, which is well above the average of 38.2 percent from 1965 to 2014. The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.

Table IIA1-2, US, Treasury Budget in Fiscal Year to Date Million Dollars

Feb 2014	Fiscal Year 2015	Fiscal Year 2014	∆%
Receipts	1,185,613	1,106,767	7.1
Outlays	1,572,149	1,483,138	6.0
Deficit	-386,537	-376,371
Individual Income Tax	555,461	513,769	8.1
Corporation Income Tax	101,634	85,422	19.0
Social Insurance	296,475	285,986	3.7
	Receipts	Outlays	Deficit (-), Surplus (+)
$ Billions
Fiscal Year 2014	3,021	3,504	-483
% GDP	17.5	20.3	2.8
Fiscal Year 2013	2,775	3,455	-680
% GDP	16.7	20.8	-4.1
Fiscal Year 2012	2,450	3,537	-1,087
% GDP	15.2	22.0	-6.8
Fiscal Year 2011	2,304	3,603	-1,300
% GDP	15.0	23.4	-8.4
Fiscal Year 2010	2,163	3,457	-1,294
% GDP	14.6	23.4	-8.8
Fiscal Year 2009	2,105	3,518	-1,413
% GDP	14.6	24.4	-9.8
Total 2009-2012	9,021	14,109	-5,090
Average % GDP 2009-2012	14.9	23.3	-8.4
Fiscal Year 2008	2,524	2,983	-459
% GDP	17.1	20.2	-3.1
Fiscal Year 2007	2,568	2,729	-161
% GDP	17.9	19.0	-1.1
Fiscal Year 2006	2,407	2,655	-248
% GDP	17.6	19.4	-1.8
Fiscal Year 2005	2,154	2,472	-318
% GDP	16.7	19.2	-2.5
Total 2005-2008	9,653	10,839	-1,186
Average % GDP 2005-2008	17.3	19.5	-2.1
Debt Held by the Public	Billions of Dollars	Percent of GDP
2005	4,592	35.6
2006	4,829	35.3
2007	5,035	35.1
2008	5,803	39.3
2009	7,545	52.3
2010	9,019	61.0
2011	10,128	65.8
2012	11,281	70.1
2013	11,982	72.0
2014	12,779	74.1

Source: http://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mthTreasStmt_home.htm CBO (2012NovMBR). CBO (2011AugBEO); Office of Management and Budget 2011. Historical Tables. Budget of the US Government Fiscal Year 2011. Washington, DC: OMB; CBO. 2011JanBEO. Budget and Economic Outlook. Washington, DC, Jan. CBO. 2012AugBEO. Budget and Economic Outlook. Washington, DC, Aug 22. CBO. 2012Jan31. Historical budget data. Washington, DC, Jan 31. CBO. 2012NovCDR. Choices for deficit reduction. Washington, DC. Nov. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO (2013Aug12). 2013AugHBD. Historical budget data—August 2013. Washington, DC, Congressional Budget Office, Aug. CBO, Historical Budget Data—February 2014, Washington, DC, Congressional Budget Office, Feb. CBO, Historical budget data—April 2014 release. Washington, DC, Congressional Budget Office, Apr. Congressional Budget Office, August 2014 baseline: an update to the budget and economic outlook: 2014 to 2024. Washington, DC, CBO, Aug 27, 2014. CBO, Monthly budget review: summary of fiscal year 2014. Washington, DC, Congressional Budget Office, Nov 10, 2014. CBO, The budget and economic outlook: 2015 to 2025. Washington, DC, Congressional Budget Office, Jan 26, 2015.

VB Japan. The GDP of Japan grew at 1.0 percent per year on average from 1991 to 2002, with the GDP implicit deflator falling at 0.8 percent per year on average. The average growth rate of Japan’s GDP was 4 percent per year on average from the middle of the 1970s to 1992 (Ito 2004). Low growth in Japan in the 1990s is commonly labeled as “the lost decade” (see Pelaez and Pelaez, The Global Recession Risk (2007), 81-115). Table VB-GDP provides yearly growth rates of Japan’s GDP from 1995 to 2014. Growth weakened from 1.9 per cent in 1995 and 2.6 percent in 1996 to contractions of 2.0 percent in 1998 and 0.2 percent in 1999. Growth rates were below 2 percent with exception of 2.3 percent in 2000, 2.4 percent in 2004 and 2.2 percent in 2007. Japan’s GDP contracted sharply by 1.0 percent in 2008 and 5.5 percent in 2009. As in most advanced economies, growth was robust at 4.7 percent in 2010 but mediocre at minus 0.5 percent in 2011 because of the tsunami and 1.8 percent in 2012. Japan’s GDP grew 1.6 percent in 2013 and stagnated in 2014. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). Japan’s real GDP in calendar year 2014 is 0.7 percent higher than in calendar year 2007 (http://www.esri.cao.go.jp/index-e.html).

Table VB-GDP, Japan, Yearly Percentage Change of GDP  ∆%

Calendar Year	∆%
1995	1.9
1996	2.6
1997	1.6
1998	-2.0
1999	-0.2
2000	2.3
2001	0.4
2002	0.3
2003	1.7
2004	2.4
2005	1.3
2006	1.7
2007	2.2
2008	-1.0
2009	-5.5
2010	4.7
2011	-0.5
2012	1.8
2013	1.6
2014	0.0

Source: Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf) with changes on Jul 21, 2015 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). For fiscal 2014, the forecast is of growth of GDP between minus 0.7 to minus 0.3 percent, with the all items CPI less fresh food 2.9 to 3.3 percent (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). The critical difference is forecast of the CPI excluding fresh food of 0.3 to 1.4 percent in 2015 and 0.9 to 2.3 percent in 2016 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). Consumer price inflation in Japan excluding fresh food was minus 0.2 percent in Dec 2014 and 2.5 percent in 12 months (http://www.stat.go.jp/english/data/cpi/1581.htm), significantly because of the increase of the tax on value added of consumption in Apr 2014. The new monetary policy of the Bank of Japan aims to increase inflation to 2 percent. These forecasts are biannual in Apr and Oct. The Cabinet Office, Ministry of Finance and Bank of Japan released on Jan 22, 2013, a “Joint Statement of the Government and the Bank of Japan on Overcoming Deflation and Achieving Sustainable Economic Growth” (http://www.boj.or.jp/en/announcements/release_2013/k130122c.pdf) with the important change of increasing the inflation target of monetary policy from 1 percent to 2 percent:

“The Bank of Japan conducts monetary policy based on the principle that the policy shall be aimed at achieving price stability, thereby contributing to the sound development of the national economy, and is responsible for maintaining financial system stability. The Bank aims to achieve price stability on a sustainable basis, given that there are various factors that affect prices in the short run.

The Bank recognizes that the inflation rate consistent with price stability on a sustainable basis will rise as efforts by a wide range of entities toward strengthening competitiveness and growth potential of Japan's economy make progress. Based on this recognition, the Bank sets the price stability target at 2 percent in terms of the year-on-year rate of change in the consumer price index.

Under the price stability target specified above, the Bank will pursue monetary easing and aim to achieve this target at the earliest possible time. Taking into consideration that it will take considerable time before the effects of monetary policy permeate the economy, the Bank will ascertain whether there is any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances.”

The Bank of Japan also provided explicit analysis of its view on price stability in a “Background note regarding the Bank’s thinking on price stability” (http://www.boj.or.jp/en/announcements/release_2013/data/rel130123a1.pdf http://www.boj.or.jp/en/announcements/release_2013/rel130123a.htm/). The Bank of Japan also amended “Principal terms and conditions for the Asset Purchase Program” (http://www.boj.or.jp/en/announcements/release_2013/rel130122a.pdf): “Asset purchases and loan provision shall be conducted up to the maximum outstanding amounts by the end of 2013. From January 2014, the Bank shall purchase financial assets and provide loans every month, the amount of which shall be determined pursuant to the relevant rules of the Bank.”

Financial markets in Japan and worldwide were shocked by new bold measures of “quantitative and qualitative monetary easing” by the Bank of Japan (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf). The objective of policy is to “achieve the price stability target of 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) at the earliest possible time, with a time horizon of about two years” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf). The main elements of the new policy are as follows:

1. Monetary Base Control. Most central banks in the world pursue interest rates instead of monetary aggregates, injecting bank reserves to lower interest rates to desired levels. The Bank of Japan (BOJ) has shifted back to monetary aggregates, conducting money market operations with the objective of increasing base money, or monetary liabilities of the government, at the annual rate of 60 to 70 trillion yen. The BOJ estimates base money outstanding at “138 trillion yen at end-2012) and plans to increase it to “200 trillion yen at end-2012 and 270 trillion yen at end 2014” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
2. Maturity Extension of Purchases of Japanese Government Bonds. Purchases of bonds will be extended even up to bonds with maturity of 40 years with the guideline of extending the average maturity of BOJ bond purchases from three to seven years. The BOJ estimates the current average maturity of Japanese government bonds (JGB) at around seven years. The BOJ plans to purchase about 7.5 trillion yen per month (http://www.boj.or.jp/en/announcements/release_2013/rel130404d.pdf). Takashi Nakamichi, Tatsuo Ito and Phred Dvorak, wiring on “Bank of Japan mounts bid for revival,” on Apr 4, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323646604578401633067110420.html), find that the limit of maturities of three years on purchases of JGBs was designed to avoid views that the BOJ would finance uncontrolled government deficits.
3. Seigniorage. The BOJ is pursuing coordination with the government that will take measures to establish “sustainable fiscal structure with a view to ensuring the credibility of fiscal management” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
4. Diversification of Asset Purchases. The BOJ will engage in transactions of exchange traded funds (ETF) and real estate investment trusts (REITS) and not solely on purchases of JGBs. Purchases of ETFs will be at an annual rate of increase of one trillion yen and purchases of REITS at 30 billion yen.
5. Bank Lending Facility and Growth Supporting Funding Facility. At the meeting on Feb 18, the Bank of Japan doubled the scale of these lending facilities to prevent their expiration in the near future (http://www.boj.or.jp/en/announcements/release_2014/k140218a.pdf).

Table VB-BOJF, Bank of Japan, Forecasts of the Majority of Members of the Policy Board, % Year on Year

Fiscal Year Date of Forecast	Real GDP	CPI All Items Less Fresh Food	Excluding Effects of Consumption Tax Hikes
2013
Apr 2014	+2.2 to +2.3 [+2.2]	+0.8
Jan 2014	+2.5 to +2.9 [+2.7]	+0.7 to +0.9 [+0.7]
Oct 2013	+2.6 to +3.0 [+2.7]	+0.6 to +1.0 [+0.7]
Jul 2013	+2.5 to +3.0 [+2.8]	+0.5 to +0.8 [+0.6]
2014
Jan 2015	-0.6 to -0.4 [-0.5]	+2.9 to +3.2 [+2.9]	+0.9 to +1.2 [+0.9]
Oct 2014	+0.2 to +0.7 [+0.5]	+3.1 to +3.4 [+3.2]	+1.1 to +1.4 [+1.2]
Jul 2014	+0.6 to +1.3 [+1.0]	+3.2 to +3.5 [+3.3]	+1.2 to +1.5 [+1.3]
Apr 2014	+0.8 to +1.3 [+1.1]	+3.0 to +3.5 [+3.3]	+1.0 to +1.5 [+1.3]
Jan 2014	+0.9 to 1.5 [+1.4]	+2.9 to +3.6 [+3.3]	+0.9 to +1.6 [+1.3]
Oct 2013	+0.9 to +1.5 [+1.5]	+2.8 to +3.6 [+3.3]	+0.8 to +1.6 [+1.3]
Jul 2013	+0.8 to +1.5 [+1.3]	+2.7 to +3.6 [+3.3]	+0.7 to +1.6 [+1.3]
2015
Jan 2015	+1.8 to +2.3 [+2.1]	+0.4 to +1.3 [+1.0]	+0.4 to +1.3 [+1.0]
Oct 2014	+1.2 to +1.7 [+1.5]	+1.8 to 2.6 [+2.4]	+1.1 to +1.9 [+1.7]
Jul 2014	+1.2 to +1.6 [+1.5]	+1.9 to +2.8 [+2.6]	+1.2 to +2.1 [+1.9]
Apr 2014	+1.2 to +1.5 [+1.5]	+1.9 to +2.8 [+2.6]	+1.2 to +2.1 [+1.9]
Jan 2014	+1.2 to +1.8 [+1.5]	+1.7 to +2.9 [+2.6]	+1.0 to +2.2 [+1.9]
Oct 2013	+1.3 to +1.8 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
Jul 2013	+1.3 to +1.9 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
2016
Jan 2015	+1.5 to +1.7 [+1.6]	+1.5 to +2.3 [+2.2]	+1.5 to +2.3 [+2.2]
Oct 2014	+1.0 to +1.4 [+1.2]	+1.9 to 3.0 [+2.8]	+1.2 to 2.3 [+2.1]
Jul 2014	+1.0 to +1.5 [+1.3]	+2.0 to +3.0 [+2.8]	+1.3 to +2.3 [+2.1]
Apr 2014	+1.0 to +1.5 [+1.3]	+2.0 to +3.0 [+2.8]	+1.3 to +2.3 [+2.1]

Figures in brackets are the median of forecasts of Policy Board members

Source: Policy Board, Bank of Japan

https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf

https://www.boj.or.jp/en/announcements/release_2014/k140715a.pdf

The Markit/JMMA Flash Japan Manufacturing PMI Index™ with the Flash Japan Manufacturing PMI™ decreased from 52.2 in Jan to 51.5 in Feb and the Flash Japan Manufacturing Output Index™ did not change from 52.7 in Jan to 52.7 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/ca6a231ce52548dfbbc034868f886d7a). New export orders increased at a faster pace. Amy Brownbill, Economist at Markit, finds improving Japan’s manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/ca6a231ce52548dfbbc034868f886d7a). The Markit Composite Output PMI Index stabilized from 51.7 in Jan to 50.0 in Feb, indicating neutral business activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/c6f5af0722b34d22816279e47f90c51b). The Markit Business Activity Index of Services decreased to 48.5 in Feb from 51.3 in Jan (http://www.markiteconomics.com/Survey/PressRelease.mvc/c6f5af0722b34d22816279e47f90c51b). Amy Brownbill, Ecoomist at Markit and author of the report, finds positive business expecations (http://www.markiteconomics.com/Survey/PressRelease.mvc/c6f5af0722b34d22816279e47f90c51b). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased marginally from 52.2 in Jan to 51.6 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/83eeef8035ec47408f22d0c32d17f783). New orders, output and foreign orders increased. Amy Brownbill, Economist at Markit, finds manufacturing improvement with prices of inputs driven by devaluation (http://www.markiteconomics.com/Survey/PressRelease.mvc/618efac17046436b879e5b824f41cfbf).Table JPY provides the country data table for Japan.

Table JPY, Japan, Economic Indicators

Historical GDP and CPI	1981-2010 Real GDP Growth and CPI Inflation 1981-2010 Blog 8/9/11 Table 26
Corporate Goods Prices	Feb ∆% 0.0 12 months ∆% 0.5 Blog 3/15/15
Consumer Price Index	Jan NSA ∆% -0.2; Jan 12 months NSA ∆% 2.4 Blog 3/1/15
Real GDP Growth	IVQ2014 ∆%: 0.4 on IIIQ2014;  IVQ2014 SAAR 1.5; ∆% from quarter a year earlier: -0.8 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13 2/23/14 3/16/14 5/18/14 6/15/14 8/17/14 9/14/14 11/23/14 12/14/14 2/22/15 3/15/15
Employment Report	Jan Unemployed 2.31 million Change in unemployed since last year: minus 70 thousand Unemployment rate: 3.6 % Blog 3/1/15
All Industry Indices	Dec month SA ∆% -0.3 12-month NSA ∆% -0.9 Blog 2/22/15
Industrial Production	Jan SA month ∆%: 4.0 12-month NSA ∆% -2.6 Blog 3/1/15
Machine Orders	Total Dec ∆% 8.6 Private ∆%: 17.5 Dec ∆% Excluding Volatile Orders 8.3 Blog 2/15/15
Tertiary Index	Dec month SA ∆% -0.3 Dec 12 months NSA ∆% minus -0.8 Blog 2/15/15
Wholesale and Retail Sales	Jan 12 months: Total ∆%: -2.9 Wholesale ∆%: -3.4 Retail ∆%: -2.0 Blog 3/1/15
Family Income and Expenditure Survey	Jan 12-month ∆% total nominal consumption -2.4, real -5.1 Blog 3/1/15
Trade Balance	Exports Jan 12 months ∆%: 17.0 Imports Jan 12 months ∆% -9.0 Blog 2/22/15

Links to blog comments in Table JPY:

3/1/15 http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html

2/22/15 http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

12/14/14 http://cmpassocregulationblog.blogspot.com/2014/12/global-financial-and-economic-risk.html

11/23/14 http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.htm

9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html

8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html

6/15/2014 http://cmpassocregulationblog.blogspot.com/2014/06/financialgeopolitical-risks-recovery.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

2/23/14 http://cmpassocregulationblog.blogspot.com/2014/02/squeeze-of-economic-activity-by-carry.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

Japan’s economy grew 1.3 percent in IQ2014, seasonally adjusted, partly because of anticipation of purchases to avoid the increase in the tax on value added of consumption in Apr 2014, contracting 1.6 percent in IIQ2014, as shown in Table VB-1, incorporating the latest estimates and revisions. Japan’s GDP contracted 0.7 percent in IIIQ2014 and grew 0.4 percent in IVQ2014. The economy of Japan contracted 0.3 percent in IVQ2013 after growing 0.4 percent in IIIQ2013, 0.8 percent in IIQ2013 and 1.4 percent in IQ2013. Japan’s GDP decreased 0.2 percent in IVQ2012 relative to IIIQ2012. IQ2012 GDP growth was revised to 1.1 percent; IIQGDP growth was revised to -0.4 percent; and IIIQ2012 growth was revised to -0.5 percent. The economy of Japan had already weakened in IVQ2010 when GDP fell revised 0.6 percent. As in other advanced economies, Japan’s recovery from the global recession has not been robust. GDP fell 1.9 percent in IQ2011 and fell again 0.5 percent in IIQ2011 because of the disruption of the tragic Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Recovery was robust in the first two quarters of 2010 but GDP grew at 1.4 percent in IIIQ2010 and fell 0.6 percent in IVQ2010. The deepest quarterly contractions in the global recession were 3.3 percent in IVQ2008 and 4.0 percent in IQ2009. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). Using seasonally adjusted and price adjusted data (http://www.esri.cao.go.jp/index-e.html), Japan’s GDP fell 9.2 percent from the peak in IQ2008 before the contraction to the lowest reading in IQ2009. Japan’s GDP fell 1.0 percent from IQ2008 to IVQ2014. GDP in Japan grew 9.1 percent from IIQ2009 to IVQ2014 at the annual equivalent rate of 1.5 percent, using the latest revision (http://www.esri.cao.go.jp/index-e.html).

Table VB-1, Japan, Real GDP ∆% Changes from the Previous Quarter Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IVQ
2014	1.3	-1.6	-0.7	0.4
2013	1.4	0.8	0.4	-0.3
2012	1.1	-0.4	-0.5	-0.2
2011	-1.9	-0.5	2.6	0.1
2010	1.5	1.2	1.4	-0.6
2009	-4.0	1.8	0.0	1.7
2008	0.7	-1.1	-1.1	-3.3
2007	1.0	0.2	-0.4	0.8
2006	0.4	0.4	-0.1	1.3
2005	0.2	1.3	0.4	0.2
2004	0.9	0.1	0.1	-0.3
2003	-0.6	1.3	0.4	1.0
2002	-0.2	1.0	0.6	0.4
2001	0.6	-0.2	-1.1	-0.1
2000	1.6	0.2	-0.3	0.7
1999	-0.9	0.4	-0.2	0.5
1998	-1.9	-0.5	0.3	0.5
1997	0.8	-1.0	0.4	-0.1

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Table VB-2 provides contributions to real GDP at seasonally adjusted annual rates (SAAR). GDP expanded at 1.5 percent in IVQ2014 with contribution of 1.2 percent by personal consumption expenditures, 0.9 percent by net trade and 0.2 percent by government consumption expenditures. Gross fixed capital formation contributed 0.0 percent and private inventory divestment deducted 0.7 percent. Trade added 0.9 percentage points. Japan contracted at 2.6 percent in IIIQ2014 with deduction of 0.5 percentage points of personal consumption expenditures and deduction of 3.1 percentage points of inventory divestment. Traded added 0.2 percentage points and government 0.2 percent. Japan’s GDP contracted at 6.4 percent in IIQ2014 with deductions of 12.4 percent by personal consumption and 4.1 percent by gross fixed capital formation. Trade added 4.2 percentage points and government expenditures 0.3 percent. Inventory divestment added 5.5 percent. The GDP of Japan expanded at 5.1 percent in IQ2014 with contributions of 5.4 percent by personal consumption and 3.2 percent of gross fixed capital formation. There were deductions of 1.2 percent by trade, 2.1 percent by inventory divestment and 0.3 percent by government expenditures. The GDP of Japan contracted at 1.2 percent annual equivalent in IVQ2013 with contraction of personal consumption expenditures of 0.4 percent and growth of GFCF at 1.1 percent. Trade deducted 2.1 percentage points. Japan grew at 1.4 percent in IIIQ 2013 with contribution of 0.8 percentage points by personal consumption and 1.9 percentage points by GFCF. Trade deducted 1.5 percentage points. Japan grew at 3.3 percent SAAR in IIQ2013 driven by contributions of 2.0 percent of personal consumption (PC), 0.2 percent of net trade and gross fixed capital formation (GFCF) at 2.0 percent. In IQ2013, Japan’s GDP increased at the SAAR of 5.6 percent in large part because of 3.2 percent in personal consumption and 1.6 percent in trade. The SAAR of GDP in IVQ2012 was minus 0.6 percent: 0.1 percentage points from growth of personal consumption expenditures (PC) less 0.4 percentage points of net trade (exports less imports) less 0.7 percentage points of private inventory investment (PINV) plus 0.6 percentage points of government consumption and minus 0.2 percentage points of gross fixed capital formation (GFCF). The SAAR of GDP in IIIQ2011 was revised to a high 10.8 percent. Net trade deducted from GDP growth in three quarters of 2011 and provided the growth impulse of 3.9 percentage points in IIIQ2011. Growth in 2011 and IQ2012 was driven by personal consumption expenditures that deducted 0.8 percentage points from GDP growth in IIIQ2012 but added 0.1 percentage points to GDP growth in IVQ2012.

Table VB-2, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	GDP	PC	GFCF	Trade	PINV	GOVC
2014
I	5.1	5.4	3.2	-1.2	-2.1	-0.3
II	-6.4	-12.4	-4.1	4.2	5.5	0.3
III	-2.6	0.7	-0.5	0.2	-3.1	0.2
IV	1.5	1.2	0.0	0.9	-0.7	0.2
2013
I	5.6	3.2	0.4	1.6	-0.2	0.7
II	3.3	2.0	2.0	0.2	-1.6	0.5
III	1.4	0.8	1.9	-1.5	0.4	-0.1
IV	-1.2	-0.4	1.1	-2.1	0.1	0.1
2012
I	4.3	1.5	-0.4	0.3	2.0	0.9
II	-1.4	1.6	0.5	-1.4	-1.8	-0.3
III	-2.2	-0.8	-0.9	-1.9	1.1	0.4
IV	-0.6	0.1	-0.2	-0.4	-0.7	0.6
2011
I	-7.3	-4.0	-0.2	-1.1	-1.8	-0.1
II	-2.1	2.6	0.2	-4.4	-1.1	0.4
III	10.8	3.9	1.3	3.9	1.5	0.1
IV	0.6	1.0	3.2	-3.0	-0.8	0.2
2010
I	5.9	1.8	0.2	2.2	2.3	-0.6
II	4.7	0.2	1.2	0.1	2.1	1.2
III	5.8	3.1	0.9	0.5	1.2	0.3
IV	-2.3	-1.1	-1.2	-0.4	0.0	0.3
2009
I	-15.0	-1.9	-2.0	-4.4	-7.4	0.7
II	7.3	4.2	-3.0	7.4	-2.1	0.7
III	0.2	-0.1	-1.4	2.2	-1.5	1.0
IV	6.9	3.3	0.0	2.7	0.5	0.3
2008
I	2.7	1.5	0.4	1.2	-0.3	-0.1
II	-4.5	-3.1	-2.2	0.5	1.0	-0.8
III	-4.2	-0.6	-1.0	0.0	-2.6	0.0
IV	-12.6	-2.8	-4.6	-11.4	5.7	0.3
2007
I	4.1	0.9	0.5	1.2	1.3	0.3
II	0.6	0.7	-1.5	0.8	0.0	0.5
III	-1.6	-1.0	-1.7	2.0	-0.6	-0.2
IV	3.4	0.3	0.3	1.4	0.9	0.6

Note: PC: Private Consumption; GFCF: Gross Fixed Capital Formation; PINV: Private Inventory; Trade: Net Exports; GOVC: Government Consumption

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 IQ2012. The only strong contribution of net trade was 3.9 percent in IIIQ2011. Net trade added 1.6 percentage points to GDP growth in IQ2013 and 0.2 percentage points in IIQ2013 but deducted 1.5 percentage points in IIIQ2013 and deducted 2.1 percentage points in IVQ2013. Net trade deducted 1.2 percentage points from GDP growth in IQ2014. Net trade added 4.2 percentage points to GDP growth in IIQ2014 and 0.2 percentage points in IIIQ2014. Net trade added 0.9 percentage points to GDP growth in IVQ2014. Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.

Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	Net Trade	Exports	Imports
2014
I	-1.2	4.2	-5.4
II	4.2	-0.2	4.5
III	0.2	1.0	-0.8
IV	0.9	1.9	-1.1
2013
I	1.6	2.4	-0.9
II	0.2	1.8	-1.5
III	-1.5	-0.3	-1.2
IV	-2.1	-0.1	-2.0
2012
I	0.3	1.7	-1.4
II	-1.4	-0.3	-1.2
III	-1.9	-2.4	0.5
IV	-0.4	-2.0	1.6
2011
I	-1.1	-0.4	-0.7
II	-4.4	-4.6	0.2
III	3.9	5.7	-1.9
IV	-3.0	-2.0	-0.9
2010
I	2.2	3.5	-1.4
II	0.1	2.7	-2.6
III	0.5	1.4	-0.9
IV	-0.4	0.0	-0.4
2009
I	-4.4	-16.4	12.0
II	7.4	4.7	2.7
III	2.2	5.2	-3.1
IV	2.7	4.1	-1.4
2008
I	1.2	2.2	-1.0
II	0.5	-1.6	2.1
III	0.0	0.1	-0.2
IV	-11.4	-10.2	-1.2
2007
I	1.2	1.7	-0.5
II	0.8	1.6	-0.8
III	2.0	1.4	0.6
IV	1.4	2.1	-0.7

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Japan’s percentage growth of GDP not seasonally adjusted in a quarter relative to the same quarter a year earlier is shown in Table VB-4. Contraction of GDP in a quarter relative to the same quarter a year earlier extended over seven quarters from IIQ2008 through IVQ2009. Contraction was sharpest in IQ2009 with output declining 9.4 percent relative to a year earlier. Yearly quarterly rates of growth of Japan were relatively high for a mature economy through the decade with the exception of the contractions from IVQ2001 to IIQ2002 and after 2007. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 caused flat GDP in IQ2011 at 0.0 percent relative to the same quarter a year earlier and decline of 1.5 percent in IIQ2011. GDP fell 0.5 percent in IIIQ2011 relative to a year earlier and increased 0.1 percent in IVQ2011 relative to a year earlier. Growth resumed with 3.5 percent in IQ2012 relative to a year earlier. Growth of 3.5 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP increased 0.2 percent in IIIQ2012 relative to a year earlier and changed 0.0 percent in IVQ2012 relative to a year earlier. GDP increased 0.5 percent in IQ2013 relative to a year earlier and 1.4 percent in IIQ2013. Growth of 2.2 percent in IIIQ2013 relative to a year earlier is partly due to the decline of 0.5 percent in GDP in IIIQ2012. GDP increased 2.3 percent in IVQ2013 relative to a year earlier. The GDP of Japan increased 2.4 percent in IQ2014 relative to a year earlier. Japan’s GDP contracted 0.3 percent in IIQ2014 relative to a year earlier. GDP contracted 1.4 percent in IIIQ2014 relative to a year earlier. Japan’s GDP contracted 0.8 percent in IVQ2014 relative to a year earlier. Japan faces the challenge of recovery from the devastation of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in an environment of declining world trade and bouts of risk aversion that cause appreciation of the Japanese yen, eroding the country’s competitiveness in world markets. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). Using price adjusted but not seasonally adjusted data (http://www.esri.cao.go.jp/index-e.html), Japan’s GDP contracted 11.5 percent from the high in IVQ2007 to the low in IIQ2009. GDP fell 0.4 percent from IVQ2007 to IVQ2014. Japan’s GDP grew 12.6 percent from IIIQ2009 to IVQ2014 at the annual equivalent rate of 2.2 percent.

Table VB-4, Japan, Real GDP ∆% Changes from Same Quarter Year Earlier, NSA ∆%

	IQ	IIQ	IIIQ	IVQ
2014	2.4	-0.3	-1.4	-0.8
2013	0.5	1.4	2.2	2.3
2012	3.5	3.5	0.2	0.0
2011	0.0	-1.5	-0.5	0.1
2010	4.9	4.4	6.0	3.3
2009	-9.4	-6.6	-5.6	-0.5
2008	1.4	-0.1	-0.6	-4.7
2007	2.8	2.3	2.0	1.6
2006	2.6	1.3	0.9	2.0
2005	0.4	1.4	1.5	1.9
2004	4.0	2.6	2.2	0.7
2003	1.7	1.8	1.5	1.8
2002	-1.6	-0.2	1.4	1.6
2001	1.6	0.9	0.0	-1.0
2000	2.7	2.4	2.2	1.8
1999	-0.3	0.1	-0.1	-0.5
1998	-2.4	-1.8	-2.3	-1.5
1997	3.5	1.5	1.7	-0.2

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015.