Something strange has been happening lately.
Despite concerns about the health of Japan and the Europe, GDP growth numbers have been massively hiked for both economies.
For example, Japan revised its latest GDP data to show 200% higher growth than previously estimated last week. The government is now in the awkward position of trying to play down the extent of the growth, since it is trying to convince the world that the strengthening yen needs to be dealt with in order to keep Japan’s export-heavy economy afloat.
Europe’s 2010 GDP forecast has also doubled to 1.8% from the 1% rate forecast in May. This has also put some European budget reformers in the awkward position of trying to play down growth.
In the U.S., while U.S. GDP data has faced some downgrades, GDP growth is still expected to exceed that of both Europe and Japan this year, even after their latest upgrades. This has put the Obama administration in the odd position of trying to highlight the economic recovery underway (and outpacing most of the developed world) while at the same time playing down the good news and repeatedly emphasising how things are still bad and the recovery needs to produce more jobs, etc.
So we’ve gone from 1) economic crisis, to 2) doubting a recovery was happening, and 3) are now playing down the the recovery seen before us. Recent 100 – 200% GDP growth upgrades out of Europe and Japan have made this denial far more difficult for all involved. If U.S. GDP upgrades are ahead, then it could be impossible.
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