The preliminary GDP figures Japan released May 18 show that the gross domestic product in the January-March quarter expanded 1.4 percent (5.6 percent annualized) in real terms over the previous quarter. Compared with the same period in 2003, first-quarter GDP grew a robust 5.4 percent. The GDP has now expanded for five consecutive quarters -- an indication that the Japanese economy is already in the middle of a recovery phase.
On the other hand, it is still widely said that this sense of recovery is not being shared by most of the public, and that many people are continuing to advocate the use fiscal and monetary measures to support the upturn. Where is this gap between robust economic data and public skepticism coming from?
For one thing, the world of commerce is gauged by nominal figures. Sales are the aggregate of prices multiplied by number of units sold. Thus an increase in volume will not lead to higher overall sales if prices have declined.