Never before in Japan has a decline stretched beyond two consecutive quarters. Both the Japanese and the foreign media saw these statements as reason for optimism, but the EPA report was very cautious, alternating pessimistic and optimistic statistics almost mechanically. For example, it said inventories are declining and then immediately added that corporate profits are as well. By themselves, the GDP figures lead to a pessimistic conclusion. With the exception of business inventories and public works spending, which jumped an annualized 49.9 percent, every single category of spending was down in 1998's last quarter from the previous three-month period.
More recent information suggests that additional public expenditures are in the pipeline.
In January, the latest month for which data are available, new public works projects increased 13.9 percent from a year earlier. That is not yet evident. Next to consumer spending, which dipped for the third straight quarter in the late fall and early winter, the largest category of private outlays is fixed nonresidential investment. The 21 percent annualized drop in this area in the last three months of 1998 reduced capital spending to its lowest share of GDP since 1956. Few experts, EPA analysts included, see much chance of a significant upturn.