But that figure was an anomaly. Japan, the world's second-largest economy, is mired in recession with little hope of recovery soon. GDP fell 5 percent in the most recent quarter, and industrial production was off 19 percent. Deflation, a decline in the price level, threatens to sweep the world. Food prices have fallen by nearly one-third from last year to the lowest point since 1993.
Consumer demand drops further, and a full-fledged recession, or even depression, is the result.
The cure for a deflationary collapse is not obvious. Japan has tried cutting interest rates, reducing taxes and boosting public-works spending, to no avail. Now, U.S. firms are feeling the head winds from Asia. Perhaps the best harbinger is the stock market itself. Since July 17, it has dropped more than 6 percent.