Economic Update

November 2000Economics 285Michael Smitka

Post-1955 GDP GrowthAnnual Real Rates, Seasonally Adjusted

(5.0%)(4.0%)(3.0%)(2.0%)(1.0%)

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

10.0%11.0%12.0%13.0%14.0%15.0%16.0%

1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000

Real GDP Growth

9.4%3.9%

1.0%

Recent Macro Growth

Summary of the September 2000 Labor Force Survey[31 Oct. 2000]

Employment -- Fell 0.5%.Unemployment -- Rose 30 thousand to 4.7%.

------------------------------------------------------------Population 15+ yrs old 108,460,000 +490,000+0.5%

Labor force 68,000,000 -310,000 -0.5%Employed 64,800,000 -340,000 -0.5%Unemployed 3,200,000 +30,000

+0.9%

Not in labor force 40,340,000 +820,000+2.1%

Participation rate 62.7% -0.6% -Unemployment rate 4.7% +0.1% -

Deflation

Consumer Price Changes Ku-area of Tokyo, October 2000

------------------------------------------------------------------ | Index Change from Change from | previous month previous year-----------------------------------+-------------------------------Ten Major Group IndexGeneral | 100.8 +0.2 -1.2(excluding imputed rent) | 100.9 +0.1 -1.1(excluding fresh food ) | 100.9 -0.1 -1.0Food | 100.1 +0.5 -2.2Housing | 99.6 +0.0 -1.4Fuel, light & water | 101.1 -1.3 +0.5Furniture & household | 89.9 -0.2 -2.5Clothes & footwear | 105.0 +0.0 -0.6Medical care | 112.8 +0.0 +0.0Transport/communication | 99.1 -0.2 -0.6Education | 108.8 +0.0 +0.9Reading and recreation | 99.0 +0.8 -1.5Miscellaneous | 103.3 +0.1 -0.1Commodity and Service Group IndexCommodities | 99.0 +0.2 -1.4Services | 102.2 +0.1 -1.0--------------------------------------------------------------

Interest Rates

Current lending rates:Short-term prime rate: 1.5%Long-term prime rate: 2.25%

Credit Creation & Money

Fiscal Policy Measures

Consumption is Falling!

Retail Sales are Falling

Only Items Up:Consumer Electronics & Foreign Travel

But Foreign Travel Doesn’t Help GDP!

Japanese Land Prices

+20%

0%

Stock market

Closing Price, Nikkei 225

10000

15000

20000

25000

30000

35000

40000

8/4/862/4/878/4/872/4/888/4/882/4/898/4/892/4/908/4/902/4/918/4/912/4/928/4/922/4/938/4/932/4/948/4/942/4/958/4/952/4/968/4/962/4/978/4/972/4/988/4/982/4/998/4/992/4/008/4/00

Peak = 38957Dec 31, 1989

Today's Close14,988 is 37% lower than 10 years ago, and 61.5% below peak!