Nonetheless, most were willing to say that the economy might well give back some of its astonishing first-quarter gains, a view endorsed by Economic Planning Agency Director General Taichi Sakaiya in a September 2 television interview. They were all wrong. The latest numbers strengthened the argument of optimists who maintain that Japan has weathered the worst of its recession. In fact, if the most recent numbers hold up, eventually a government committee may date the end of the downturn to sometime earlier this year.
Few analysts are willing to venture nearly that far, however.
The GDP figures indicate that demand remains at historically low levels despite recent gains. Overall, GDP was 3.3 percent lower in the second quarter than during its all-time peak in the first quarter of 1997. Apart from the latest recessionary period, which started in early 1997, that number was the lowest quarterly percentage since the first quarter of 1963. The second-quarter housing surge added 0.6 percentage points to quarterly GDP growth of 0.2 percent, suggesting the critical importance of this factor to positive growth in the second quarter. If housing, aided by low interest rates, relatively cheap land and a variety of government programs, merely recovers to its typical share of 5 percent or more of economic activity, it could play a continuing role in stimulating the economy over several more quarters.