Fourth-Quarter Economic Growth in The United States and Japan

February 15, 2010

The United States and Japan had similar growth in GDP, consumption, business investment, and exports last quarter.  The following table expresses fourth quarter against third quarter growth off GDP and its main components — consumption C, non-residential investment I, residential investment H, government spending G, exports X and imports M — as percentage changes at an annualized rate.  Performances differed more significantly in government spending substantially in imports, housing, and inventories. Inventories accounted for 3.4 percentage points (ppts) of positive U.S. GDP growth but just 0.3 ppts in Japan’s case last quarter.

4Q09 C I H G X M GDP
U.S. 2.0% 2.9% 5.7% -0.2% 18.1% 10.5% 5.7%
Japan 2.7% 4.0% -12.8% 1.4% 21.7% 5.3% 4.6%


For the whole calendar year of 2009, Japanese real GDP fell 5.0%, twice as much as the U.S. decrease of 2.4%, but on-year growth between the fourth quarter of 2008 and the fourth quarter of 2009 was similar in the two economies, firming 0.1% in the U.S. and dipping 0.4% in Japan.  A second table below breaks down GDP growth between 2008 and 2009 and its main demand components.

2009 C I H G X M GDP
U.S. -0.6% -17.9% -20.4% 1.9% -9.9% -14.2% -2.4%
Japan -1.0% -19.3% -14.6% 2.3% -24.0% -17.0% -5.0%

Another notable difference in the two economies concerns their price deflators.  The U.S. personal consumption deflator rose 0.2% last year, while Japan’s fell 2.2% in 2009 and by 2.7% between the fourth quarters of 2008 and 2009.  Because of deflation, nominal Japanese GDP (that is, not adjusted for price changes) was 3.3% lower in the fourth quarter than a year earlier and posted a calendar year drop of 6.0% in 2009 after declining 2.0% in 2008.

Economic growth in the fourth quarter was much weaker in Europe than in either Japan or the United States.  Real GDP in the euro area edged up only 0.1% from the third quarter, an annualized gain of about 0.4%, and would not have expanded at all if not for positive growth of 0.6% in France and 0.3% in the Netherlands.  GDP was unchanged in Germany and Portugal and fell in Italy, Spain, and Greece.  In Britain, which does not use the common currency, real GDP also expanded merely 0.4% at an annualized rate last quarter.  On-year economic growth in the fourth quarter, that is from 4Q08 to 4Q09, was negative 2.1% in the euro area and negative 3.2% in Britain.  In 2009 versus 2008, comparisons, the growth rates of Euroland and Britain were negative 4.0% and minus 4.8%, in other words much closer to the experience of Japan than of the United States.

Much stronger fourth-quarter 2009 against fourth-quarter 2008 increases of real GDP belong to China (10.7%), South Korea (6.0%) and Indonesia (5.4%).

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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