The Economist (April 30)
Developed in the wake of the Great Depressions and World Wars, gross domestic product (GDP) was originally designed “to measure the economy’s capacity to produce. Since then, GDP has become a lodestar for policies to set taxes, fix unemployment and manage inflation.” The metric can be inaccurate and is often overstretched. More robust benchmarks must be developed and this will require “a revolution in national statistical agencies as bold as the one that created GDP in the first place”.
Tags: Benchmarks, Economy, GDP, Great Depressions, Inflation, National statistical agencies, Revolution, Taxes, Unemployment, World Wars
Wall Street Journal (February 15)
“Three years since Mr. Abe took power pledging to end two decades of falling prices and wages, followed by the launch of a massive monetary easing program by the Bank of Japan, headline inflation is still languishing around zero, real wages are falling and the economy has yet to achieve consistent growth.”
Bloomberg (February 1)
“The Bank of Japan governor’s major additions to stimulus in 2013 and the following year were unequivocally good for equities…. The latest salvo to spur inflation- negative interest rates on some deposits- is less straightforward.” Kuroda’s surprise move to negative rates has earned everything from praise to criticism, with some taking a wait-and-see approach.
Tags: BOJ, Deposits, Equities, Inflation, Interest rates, Kuroda, Stimulus, Straightforward
Financial Times (December 3)
“For the average Japanese investor and consumer, inflation expectations have not budged. Japan needs to jump-start a wage-price spiral of the sort feared from the 1970s…. Such a cycle should be started by increasing nominal wages by 5 to 10 per cent in 2016.”
Tags: 2016, Consumer, Expectations, Inflation, Investor, Japan, Price spiral, Wages
Institutional Investor (November 18)
“Since World War II, the U.S. economy has averaged a recession every five years.” Despite over six years of recovery, it doesn’t look like the U.S. is especially prone to recession because “the catalysts for a downturn aren’t in place.” There’s no real asset bubble, overheating or inflation. A recession is always a risk and can be brought about by unforeseen external shocks. At the moment, however, the risk of a recession looks normal, about 20–25%, for the next 12 months.
Tags: Asset bubble, Economy, External shock, Inflation, Overheating, Recession, Recovery, Risk, U.S., World War II
Financial Times (November 4)
It now “seems likely, and indeed desirable, that the BoJ will be forced to expand its programme of quantitative easing before too long.” The Bank of Japan revised both its inflation and growth forecasts downward, and extended its horizon for achieving its inflation target. “Disappointing outcomes do not mean that the BoJ’s combination of an inflation target and using QE has failed, but that it needs to be more enthusiastically pursued. The BoJ can and should contemplate going further.”
Tags: Bank of Japan, Forecasts, Growth, Inflation, Outcomes, Quantitative easing
Bloomberg (October 26)
“Reality keeps beating BOJ’s inflation forecasts.” According to Bloomberg, the Bank of Japan (BOJ) ranks last or next to last in the accuracy of its forecasts for inflation and GDP when compared to other major central banks. The Bank of Japan has had to lower its inflation estimates for all four years from 2014 and now looks poised to follow suit on Friday with its release of updated inflation forecasts.
The Economist (August 29)
“After two years of remission, Japan seems likely to sink back into the ‘chronic disease’ of deflation…. New data are expected to show on August 28th that core CPI, the central bank’s preferred indicator of inflation, turned negative in July for the first time since the bank launched a big programme of quantitative easing… in April 2013.” Fortunately, better-than-expected data caught economists by surprise, showing level prices so Japan remains out of inflation, though just barely.
Institutional Investor (August 27)
Gold is losing “its luster as an asset class.” Long considered a “hedge against inflation, currency volatility and geopolitical turmoil,” many experts are now questioning gold’s status as a legitimate investment. “Gold has failed to benefit from global economic and political turbulence recently…. Given that gold offers investors no yield, if it doesn’t rise in value during episodes like these, investors don’t have many reasons to hold it.”
Tags: Asset class, Currency volatility, Geopolitical turmoil, Gold, Hedge, Inflation, Investment, Investors, Turbulence, Value, Yield
Institutional Investor (July 14)
Brazil hopes that a return of foreign capital might provide “an economic boost.” The country sure needs it. The economy has slumped “from 7.5 percent in 2010 to just 0.1 percent in 2014.” It is now in recession. “The end of the global commodities supercycle and the oil market collapse explain much of the decline, but domestic policy problems—including a growing deficit and accelerating inflation—are also to blame.”
Tags: Brazil, Collapse, Commodities, Deficit, Economy, Foreign capital, Inflation, Oil, Recession, Supercycle
