The economy is “worsening rapidly” and is “in a severe situation,” the government said Monday, leaving its assessment unchanged for the first time in six months.
The Cabinet Office had downgraded its view for five consecutive months to February to reflect sharp declines in economic activity.
The March report lowered the office’s assessment of corporate profits, saying they are “decreasing very substantially.” In February, the office said they were “falling substantially.”
The description was modified in line with a recently released quarterly government survey that showed firms’ pretax profits in the October-December quarter plunged 64.1 percent from a year earlier, sinking at the fastest pace in 34 years.
A Cabinet Office official said that as firms reduced production activities, sales fell and profits plummeted. He warned that the lack of a downward revision in the government’s assessment in March “does not necessarily mean economic conditions stopped worsening.”
The report leaves unchanged the government’s descriptions of other economic areas, saying exports and industrial output are “decreasing very substantially,” capital spending is “decreasing,” the employment situation is “getting worse rapidly” and private consumption is “decreasing modestly.”
On short-term prospects, the report retains the view that the economy is “likely to continue worsening for the time being” and that there is fear that the rapid reduction of production will lead to “significant” adjustments in employment.
On economic conditions overseas, the Cabinet Office downgraded its evaluation of the United States in view of dismal indicators for the country’s future economic development and financial unrest.
The report says the U.S. recession “has become severer and there are growing risks that the downturn will be prolonged.”
U.S. gross domestic product in the October-December quarter shrank an annualized real 6.2 percent from the previous three months, its fastest pace of decline in almost 27 years. Unemployment shot up to 8.1 percent in February, hitting a 25-year high.
Another Cabinet Office official said the U.S. is set to see its longest recession since World War II, because the contraction that started in December 2007 is certain to exceed the previous record of 16 months.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.