Here's the latest bit of news from Japan:
Japan's factory production rose to a record, while household spending fell, underscoring the central bank's concern that growth has bypassed consumers and left the economy dependent on exports to expand.
Industrial production climbed a seasonally adjusted 0.7 percent in December, the trade ministry said in Tokyo today. Household spending declined for a 12th month, falling 1.9 percent from a year earlier, the statistics bureau said.
Without a recovery in consumer spending, Bank of Japan Governor Toshihiko Fukui may delay raising the benchmark overnight lending rate from 0.25 percent, the lowest among major economies. Wages grew 0.1 percent in the third quarter of 2006, when average corporate profits surged 15.5 percent.
This a really only serves to confirm the picture Claus has been arguing. I suppose it would be rather strong language to state that the entire consensus view was almost "out to lunch" on what was actually happening in the real world these days. Something important is happening in Japan, the sign of things to come (and lets just wait till we get round to some real data for Germany for January 2007), while at the other end of the scale people seem to totally underestimate India's growth potential, and the issue is one and the same in each case: demographics. On the one hand what we are seeing is a demographic penalty, and on the other a demographic dividend. Of course, in order to appreciate that this is the case you need to at least consider the possibility - contrary to classic textbook wisdom - that demography may be an important part of the macro growth picture.
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