In its economic assessment for November, the government announced that the Japanese economy is in a state of mild deflation — the first time since June 2006 that the monthly report has referred to deflation. The very mention of it indicates the government's sense of crisis over a possible rise in unemployment and more wage cuts.
Japan's real gross domestic product for July-September grew 1.2 percent from the previous quarter, or an annualized 4.8 percent. But nominal GDP, which reflects price movements, shrank 0.1 percent from the previous quarter, or an annualized 0.3 percent. It was the second straight quarter that nominal GDP underperformed real GDP. The consumer price index in September (CPI) — excluding perishables — dipped 2.3 percent from a year before, for the seven consecutive monthly decline.
Also worrisome is the downtrend in wages. The labor ministry says the average monthly wage in September was 1.6 percent lower than a year before, having shrunk for 16 straight months. Summer bonuses this year were about 10 percent lower than last year and winter bonuses are expected to see the largest drop in 20 years.