The unemployment rate hit a record high 5.3 percent in October, clouding prospects for yearend bonus payments and household spending.
Many companies are now resigned to further profit falls.
Slackening demand for industrial equipment and machinery is forcing manufacturers to balance their production capacity.
Although the Diet is set to pass a supplementary budget for this fiscal year, the government remains inhibited from dropping its tight fiscal policy.
Bleak economic prospects are not confined to Japan alone.
Battered by a slowdown since mid-2000 and the burst of the information-technology bubble, the U.S. economy contracted in recent months and now appears heading toward a recession — two consecutive quarters of declining gross domestic product.
The 0.4 percent drop in GDP in the July-September quarter is now widely expected to be followed by an even sharper decline in the current quarter.
The Sept. 11 terrorist attacks sent out shock waves through the U.S. and around the globe and were followed by the spread of anthrax scares.
After having long served as a major global economic driving force, the United States is now rocking the world economy.
In weighing U.S. economic prospects, we cannot underestimate the negative impact of the recent break in New York stock prices and a cutback in production by U.S. manufacturing industries.
What’s more, it is anybody’s guess how long the U.S.-led military campaign on terrorist targets in Afghanistan will continue.
Washington is pushing for stimulative fiscal and monetary policy measures, raising expectations of an economic recovery next year.
Fears remain, however, over bloated industry stockpiles of unsold products that are forcing manufacturers to curtail production capacity.
Pessimism also lingers over the effects of the current stimulative policy measures on the economy.
If worst comes to worst, a protracted economic predicament could trigger a flight of foreign capital out of the U.S., which would no doubt plunge the global financial markets into chaos.
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