U.S. and Japanese GDP Growth Profiles Compared

August 12, 2013

Between the first and second quarters of 2013, real GDP expanded at annual rates of 1.7% in the United States and 2.6% in Japan.  This was the third consecutive quarter of positive Japanese growth following last year’s recession.  Over those three quarters, Japanese annualized growth of 1.8% also surpassed U.S. growth since 3Q12 of 0.7%. 

Since the start of the current U.S. upswing in mid-2009, however, U.S. GDP growth of 2.2% per annum has surpassed average Japanese growth of 1.8% per year.  Likewise, since end-2007, U.S. growth of 0.8% per year has exceeded Japanese GDP growth, which was negative but smaller than -0.05% per year.

The sources of growth in these two economies were different for the most part last quarter.  Net foreign demand exerted a 0.8 percentage point (ppt) drag on the growth of the U.S. economy but augmented Japanese GDP growth by 0.7 ppts.  The change in inventories bolstered the U.S. growth rate by 0.4 ppts, while depressing Japanese growth in 2Q13 by 1.1 ppts.  Business residential and non-residential fixed investment lifted U.S. growth by marginally over 0.9 ppts.  Each of these demand components, in contrast, slid marginally in Japan and gave no support to overall economic growth.  Government spending rose 4.2% in Japan but fell 0.4% in the United States.  Contributions to GDP growth from public demand amounted to 0.8 ppts in Japan and -0.1 ppts in the United States.  The main similarity involved personal consumption, which advanced 1.8% in the United States and 3.1% annualized in Japan.  Between 2Q12 and 2Q13, U.S. consumption grew 1.8% as well, this time exceeding the 1.1% rise of Japanese real consumer spending.

We have here a case of different strokes for different folks.  The U.S. and Japan performed well relative to Euroland, which was in a sixth quarter of recession.  The U.S. and Japanese upswings relied on different sources of demand to a large extent.  Finally, U.S. growth was low relative to historical norms, and Japan’s growth rate of 2.6% was down from 3.8% in the first quarter. 

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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