Japan's gross domestic product increased 0.9 percent (or an annualized 3.7 percent) in real terms for the April-June period from the previous quarter, marking the first growth in five quarters. The rise, which follows a 3.5 percent (annualized 13.1 percent) fall in October-December 2008 and a 3.1 percent (annualized 11.7 percent) drop in January-March 2009, appears to show that the economy has hit bottom. But the economic recovery lacks legs. It is too early to assume that the economy is on a steady growth track.

Overseas demand boosted GDP 1.6 percent, but sluggish domestic demand pulled it down 0.7 percent. Economic growth in China and Southeast Asia contributed to a 6.3 percent increase in exports. Since the U.S. and European economies are still stagnant, it will take a long time for Japanese exports to recover to the level that prevailed before the global recession.

Although consumer spending, which accounts for 55 percent of GDP, rose 0.8 percent — the first rise in three quarters — it was mainly propped up by government stimulus measures such as subsidies for fuel-efficient cars and an "eco-point" system for purchases of energy-efficient appliances. After demand for these products drops, consumers may once again tighten their purse strings. The income situation is rather gloomy. Average wages at Japanese firms dropped by a record 7.1 percent in June compared to the year before.

Housing investment declined 9.5 percent following a 5.7 percent decline in the previous quarter, mainly due to slow construction starts of condominiums. Capital investment contracted 4.3 percent for the fifth straight quarter of decline although public investment rose 8.1 percent.

The employment situation is bleak. The unemployment rate in June rose 0.2 percentage point from the previous month to 5.4 percent, just short of the postwar record of 5.5 percent. There is concern that July's unemployment rate may top the record. There was only 0.43 job offer for every job seeker. Both the government and enterprises need to make serious efforts to increase workers' share in income and strengthen local economies.