When the American economy sneezes, Japan's catches a cold. This old adage has always been a good guide to Japan's economic fortunes. So now that an increasing number of U.S. forecasters are openly worrying about a U.S. recession coming soon, how afraid does Japan have to be?
Not very much, because structural change in Japan has been real and the nation has significantly decoupled from U.S. economic dependence.
Take a look at the facts. First, in the cold world of financial co-dependence, there is no denying the historically tight causality link between Japanese companies' financial fortunes and U.S. demand. However, the link has become less important over past decades.