Japan announced early this week that they were in a recession again. Their policies supposedly did not work and the economy shrunk. Sometimes though policy takes many years to take its full effect and to see all the consequences that arise out of it. Many media outlets proclaimed that since Japan was doing poorly that the rest of the economy will soon follow. I doubt it. Japan is a big economy but their shrinking is not really a surprise. They have not grown significantly for thirty years and they have a older population. The unemployment rate is really low and maybe with the economic factors currently in Japan they are stuck until another great development.
Here is a good discussion of Japan's announcement from Tyler Cowen. I think his analysis is spot on and really shows we have nothing to really fear from this announcement and can keep living our lives. It does not mean we will have a contraction. But then again it is hard to tell and maybe we are in a time now where growth can not always occur.
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