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Japanese GDP Plunges 6.8% As Consumer Spending Collapses By Most On Record

August 15, 2014

Noted:
* 14 Reasons Why The U.S. Economy’s Bubble Of False Prosperity May Be About To Burst
* Mystery as £20,000 cash is withdrawn from accounts of four passengers who went down with doomed Flight MH370

Source of report here.

Compared to the 3.6% drop in GDP when Japan last hiked its consumption tax in 1997, today’s Q2 GDP collapse of 6.8% annualized is an utter disaster (even if it is slightly better than the expected -7.0% expectations thanks to a surge in the deflator). Inventory additions added 1.0% growth. Consumer Spending collapsed 5.2% QoQ – the most on record. Of course, in the traditional of Keynesian hockey-sticks, this XX% collapse in Q2 is expected to surge back to a 2.5% growth figure in Q3 and lead Japan to the holy grail once more.. only it didn’t quite work out that way last time for Japan. Simply put this is the worst posible outcome for bulls, small beat not enopugh to rejuice QQE. As a gentle reminder of just what happened in 1997 – the last time Japan hiked taxes – we provide the eerily analog chart below…

Japanese GDP growth was almost twice as bad as the last time Japan hiked its taxes…

20140812_japan3_0

As Consumer Spending collapsed…

20140812_japan4_0

Here come the hockey-sticks…

20140812_japan2_0

*  *  *

Let’s hope the last 10 months was just coincidentally 90% correlated to 1997!!

20140812_japan1_0

And remember – they were quantitatively easing then too!

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