Japan released its Q1 GDP overnight with the economy “growing” at 0.6%. This was good news for the quasi-first world economy.
“The result greatly surpassed expectations but economists cautioned against concluding that a sustainable recovery was under was. They said the growth figure was pushed sharply higher by a downward revision to the previous quarter’s number and an extra leap year day in February that inflated the consumer spending result, Wall Street Journal reported this morning.
So if you are a world economic power — which I don’t subscribe to — how does a leap year have a dramatic effect on GDP?
But this is where we are in the global economy, a leap day or an extra weekend in April — as cited by Commerce Dept in its April retail sales report — versus last year is where we are find growth.
In Japan there was consumer spending growth. This is not a byproduct of the Japanese signaling all clear in the economy, it has more to do with a strengthening yen sending prices higher that had consumers buying now instead of waiting and paying more.
Should the yen move down to 100 against the dollar, Japan consumer spending should soar, but that will not be good for the Japanese economy.
Look for the implosion of the Venezulan economy to have far-reaching implications. We could easily see the Brazilian Olympics cancelled as civil unrest spreads across the hemisphere.
Runaway inflation and a decimated middle class under ex-leader Hugo Chavez policies will create refugees seeking food and basic living conditions.
Brazil is going through its own turmoil as government corruption and patronage scandals will topple its government.
The question is will China attempt to come in and meddle in the affairs? Time to read up on the Monroe Doctrine.