You may recall that I warned you to expect further revisions to the third quarter GDP numbers. Japan’s massive reduction of reported growth won’t be the last:
Japan’s Government today hit the Tokyo market with a “ridiculous” revision of its previous estimates for third-quarter gross domestic product (GDP), effectively admitting that the country’s economic rebound may have been only a mirage. The new figures revealed a misreading of corporate investment, which, it now emerges, shrank rather than grew between July and September. There was a similar confusion over deflation, with new numbers showing that the GDP deflator fell 0.5 per cent in the quarter, rather than rising 0.2 per cent as previously reported.
As a result, GDP rose by 1.3 per cent in the third quarter, compared with the previous estimate of 4.8 per cent.
In fact, I won’t be the least bit surprised if the numbers eventually turn negative over time. Remember, GDP is simply an abstract estimate, and as such, it is less important than unemployment. Although you’d be forgiven for thinking otherwise courtesy of the statistical obsessions of modern Keynesians, Keynes’s master work was not actually the general theory of GDP, CPI, and the targeted discount rate. There has not been any economic growth; since GDP measures government spending, all of the “growth” that has been reported is nothing more than the stimulus spending. In fact, if you compare the amount of the spending to the amount of the reported growth, you’ll soon see that a) the numbers don’t add up, and, b) if they did add up, (i.e. if the entire amount of government spending was included in the GDP equations), then the economy is contracting much faster than would seem possible.