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Economic parallels between
America and Japan

Terrible twins?
Jun 13th 2002
From The Economist print edition


America's economy looks awfully like Japan's after
its bubble burst

JAPAN'S economy rebounded at an annual rate of
5.7% in the first quarter of this year, a shade faster
than America's. Unfortunately, many economists
distrust Japan's notoriously volatile statistics: they
expect output to fall again in the current quarter.
More than 12 years since Japan's stockmarket bubble
burst in December 1989, its economy remains fragile.
Meanwhile, America appears to have survived the
bursting of its bubble in 2000 rather better-so far.

The similarities between America's financial bubble in
the 1990s and Japan's in the 1980s have been well
rehearsed. In both cases, share prices and capital
spending soared; households and companies went on
a borrowing binge. Japan, like America a decade
later, enjoyed a spurt in productivity growth,
suggesting to some that it had a superior economic
model.

Yet the conventional
wisdom now is that
the economies have
taken divergent paths
since their bubbles
burst. Thanks to
resilient consumer
spending, America is
widely tipped to enjoy
robust growth this
year and next.
Meanwhile, Japan is
expected to languish
in perpetual recession.

Look again. America's
economy over the past
two years has in many
ways mirrored the
performance of Japan's
immediately after its
bubble burst (see
charts). In the two
years from December
1989, Japan's
stockmarket fell by
40%, slightly more
than the 33% fall in
the S&P 500. Japan's
economy held up well
during those two
years. GDP growth did
not turn negative until
1992. Capital
spending slowed sharply, but consumer spending
continued to boom. In fact, property prices continued
to rise strongly for two years after the stockmarket
tumbled. This sounds like America today, since rising
house prices have bolstered consumer spending.

Economists argue that recent swift productivity
growth points to robust recovery in America. Yet
productivity growth in Japan was almost as brisk in
1990-91. America's troubles may still lie ahead.

Another claim is that America's Federal Reserve has
eased interest rates aggressively, whereas the Bank
of Japan was slow to ease and so failed to prevent
deflation. The Bank of Japan has been overly cautious
in recent years; but criticism of the bank's policy in
the early 1990s may be unfair. Deflation did not
develop until the mid-1990s. In 1990-91, Japan had a
higher inflation rate than America has today.

Admittedly, Japan did not start to cut interest rates
until 18 months after the stockmarket began to fall,
whereas the Fed started only nine months after. Yet
if monetary policies are considered in relation to
growth rates, it is not clear that interest rates were
cut more swiftly in America. As the lower chart
shows, GDP growth was brisker in the early 1990s in
Japan than it was in America last year. According to
Stephen King, chief economist at HSBC, both the
Bank of Japan and the Fed began to cut interest rates
during the third consecutive quarter of below-trend
growth.

And what about one other popular argument in
support of America's economic resilience? Japanese
firms in the late 1980s used shady accounting
practices to conceal financial problems. Now that
could never happen in America.


Quelle: Economist - nur für Abo

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