Mori appears to be betting that his ruling party will get a much-needed boost from stronger growth in the January to March period. That may be a shrewd move. The overall trend is positive, government officials insist, citing strong exports and increasing corporate spending on industrial equipment.
Confidence is what's sorely lacking in Japan.
All of this is bad news for politicians, since consumer spending makes up two-thirds of Japan's economy. Until shoppers feel secure enough to part with more yen, a truly self-sustaining economic recovery will remain out of reach, bearish economists say. Because of depressed spending levels, the government could resort to yet another public-works spending package later this year to keep the economy from sliding back toward recession. In any case, not everybody thinks more pump-priming is the answer. Susumu Okano, chief economist at Daiwa Research Institute, says improving industrial production will gradually pull the economy out of its slump as corporate profits rise and wages stabilize.