Here’s an important chart we’ve seen in various permutations recently. This particular version comes from Commonwealth Bank of Australia, and it shows the trajectory of current Japanese consumption vs. Japanese consumption in 1997, the last time there was a hike in the consumption tax. As has been well discussed, despite the inclination and desire to stimulate the economy, Japan recently late its consumption tax jump from 5 to 8%.
So what happened last time? A big spike pre-jump (getting ahead of the hike) and then a violent tumbling in growth.
Watch this in the coming months.