This is very bad news for one of the leading economies in the world. Japan has struggled since their own bubble burst a few decades ago and their attempts to recover have never been effective. The government has been inconsistent with its plans and now the economy is falling apart, yet again. Even in the best of times, Japan does not change quickly though the voters are completely disgusted with their government, who now has an approval rate under 10%.
Japan's economy contracted at its sharpest pace since 1974 in its fiscal third quarter, raising the prospect the Bank of Japan may unveil additional stimulus measures this week to combat a darkening economic outlook in the world's second-biggest economy.Could we learn lessons from their failed attempts to recover? Probably. Will Washington bother? Doubtful. Obviously Japan didn't offer enough tax cuts because that's always been the path to recover, according to the GOP and too many Democrats.
The economy shrank 12.7% on an annualized basis in the October-to-December period, or 3.3% from the previous quarter, according to preliminary data released Monday by the Cabinet Office.
The decline was the biggest since a 13.1% annualized contraction in the January-to-March period in 1974.
"The Japanese economy is deteriorating quite rapidly, and such deterioration is penetrating into households," said Barclays Capital economist Kyohei Morita in Tokyo.
Economists polled by Dow Jones Newswires had expected an 11.7% contraction.
Exports were down a record 13.9% on quarter, business investment fell 5.3% and private consumption eased 0.4%.
