Banks, still burdened with bad debts, are continuing to shrink their loans, especially to small firms that employ four in five of the country's workers. Yet it does not take a doctorate in the dismal science to detect that the government's claims about the economy's behaviour have been pretty erratic. After shrinking in 1998, the economy is now supposed to have grown in the first half of last year, only to plunge back into recession in the second six months. Supertankers the size of the world's second-biggest economy should not be able to turn on the spot like this, let alone to perform the trick twice in a year. There are, in any case, several technical reasons for being sceptical about the official figures.
Seasonal adjustment seems to have been applied in a crude and archaic fashion.
The GDP data have often been hugely revised. Figures for capital investment do not take account of all IT spending, which is growing fast in Japan as elsewhere. According to the official figures, after loosening their purse strings early last year, households are now scrimping again, which is why the economy has tipped back into recession. But the government bases its data for household spending on a tiny sample of fewer than 8,000 households, which it also changes far too often. And the household survey's questions take no account at all of spending in such new, fast-growing areas as mobile telephones.