Yes, there is trouble in Japan

Just yesterday I posted about how weak real wages in Japan spells trouble for Abenomics. (link) Today we see by way of Stanley White and Leika Kihara at Reuters that output in Japan might be showing recession.

“Output is clearly weakening, enough to make you even wonder if the economy is OK,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.”

I said yesterday in the comments section of my post that GDP growth will slow down…

I keep something in mind… From my view, Japan is already up against the effective demand limit. How do I know? Capacity utilization has been falling all year while unemployment ticks down. So GDP growth will not keep rising as much as in the 1stQ 2014.

Disposable personal income is weak…
household spending got weaker too… You see a jump before the taxes in this graph.
If household spending simply returns to zero% growth, it will be trending on a lower path now after a few months of decline. We would need to see household consumption rise more than that.