Honestly, we’re not sure how an economy that’s been in a near-constant deflationary slide since the early 90s can ever have a double-dip recession. Octuple-dip sounds more like it.
But, Japanese leaders are out with a fresh warning that deflation is still causing new problems, and that despite some recent good economic growth (though we flagged it for being deflationary, mainly) a backslide is still possible.
WSJ: Weak domestic demand has caused the world’s second largest economy to enter “a mild deflationary phase”, the government said in its November monthly economic report released Friday.
This is the first time since mid-2006 that the authorities said Japan is beset by persistent price falls, which can hurt the economy by pushing down corporate profits, increasing firms’ debt burdens, and prompting company managers to reduce workforce and hold off on new investments. The declaration in its official report suggests Tokyo is worried about whether the price downturn will lead to a double-dip recession.
The government also said it needs to watch whether the economy is depressed by a further worsening of the jobs market, concern over a slowdown in overseas economies, and damage from deflation and volatility in markets.
It just does not end there. This is like one of those nightmares that lasts all through the night, even if you wake up several times in between, you can’t shake it.
But, it may be better than taking severe pain right off the bat, which is what we’ve chosen to do.