It was initially published in French here
Different elements must be noticed this week to understand the macroeconomic outlook
The first element is Janet Yellen’s speech. She talked one week after the press conference following the last Fed’s monetary committee. In her discussion of the US monetary policy, everyone was able to find what he wanted to find. Pros and cons of a rate hike have arguments in her speech to feed their own perception. The situation remains highly uncertain on monetary policy side
The second point is related to the French economy. With the second GDP estimate for the second quarter, we have details on behaviors. Before that, we note that the French profile is marginally stronger. The first quarter GDP growth is still at 0.7% (non-annualized rate) and the second at 0% but the carry over growth for 2015 is higher at 0.87% versus 0.83%. To converge to 1% which is the government target, a mere 0.18% is needed in each of the two remaining quarters of this year. Before the new estimate it was 0.25%. Continue reading
I have already spoken a lot on VAT rate hike in Japan and the negative impact that this fiscal measure has had on the economic outlook (see here, here and here)
The negative GDP growth number for the second quarter was not a surprise. It dropped by -6.8% (at annual rate) after +6.1% during the first three months of this year. Compared to the second quarter of 2013 growth is at 0%. Carry over at the end of the first semester is 0.5% for 2014.
The first chart presents the Japanese GDP profile since 2000. The red line is a trend calculated from 2000 to Q2 2008. At the end of the second quarter of 2014 the gap between the GDP level and the trend is -8.7%. The GDP level is 8.7% below the trend. Continue reading
The increase of the VAT rate on April the 1st was an important event in Japan but also for the world economy. The success or failure of the Abenomics was partly dependent on the impact of this increase on Japanese consumers’ behavior. We now have figures from department stores’ sales in May.
One month ago I did a first evaluation of the higher VAT rate on sales (here in French for department stores and here in English for retail sales). This post is an update.
In April department stores’ sales dropped dramatically after the VAT rate hike. March figures were strong in anticipation of this increase.
This dynamics was the same than in 1997 during the previous VAT increase.
Is there a difference in May? Continue reading