• 657 days Will The ECB Continue To Hike Rates?
  • 658 days Forbes: Aramco Remains Largest Company In The Middle East
  • 659 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,059 days Could Crypto Overtake Traditional Investment?
  • 1,064 days Americans Still Quitting Jobs At Record Pace
  • 1,066 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,069 days Is The Dollar Too Strong?
  • 1,069 days Big Tech Disappoints Investors on Earnings Calls
  • 1,070 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,072 days China Is Quietly Trying To Distance Itself From Russia
  • 1,072 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,076 days Crypto Investors Won Big In 2021
  • 1,076 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,077 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,079 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,080 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,083 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,084 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,084 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,086 days Are NFTs About To Take Over Gaming?
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Robert Folsom

Robert Folsom

Elliott Wave International

Robert Folsom is a financial writer and editor for Elliott Wave International. He has covered politics, popular culture, economics and the financial markets for two…

Contact Author

  1. Home
  2. Markets
  3. Other

How Fast Can an Economy Go From Good to Bad?

The most recent GDP figures seem to echo what Fed Chairman Greenspan said in February in his semiannual Monetary Policy Report to the Congress. For brevity's sake I'll condense his opinion about the U.S. economy into three words: All is well.

I could offer a fact-filled and scathing rebuttal, but why be quarrelsome? Instead I'd like to answer this simple question: "How quickly can a very large industrial economy go from good to bad?" My case-in-point is recent indeed -- up through the business news as of February 16, 2005. All the headlines and subheads come from BBC News reports. Please note the dates.

Export-led growth spurt for Japan
Japan's economy grew at its fastest rate in 13 years in the last quarter of 2003, helped by a rise in exports to the United States and China (Feb. 18, 2004).

Optimism at 7-year high in Japan
Business confidence in Japan is at its highest level for seven years, the Japanese central bank's latest quarterly survey has found (April 1, 2004).

Mixed message for Japan's economy
A surprise slowdown in industrial output growth has raised doubts about the strength of Japan's recovery (June 29, 2004).

Slower growth in Japanese economy
The Japanese economy grew at a slower than expected rate during the quarter to June, according to new figures (Aug. 13, 2004).

Japanese growth grinds to a halt
Growth in Japan evaporated in the three months to September, sparking renewed concern about an economy not long out of a decade-long trough (Nov. 12, 2004).

Japan economy slides to recession
The Japanese economy has officially gone back into recession for the fourth time in a decade (Feb. 16, 2005).

Mind you, the reports of growth and optimism just one year ago in Japan looked convincing indeed. The Japanese economy and stock market had been through bouts of deflation and decline since 1990; the Nikkei index saw rallies of 48%, 34%, 56% and 62% before hitting a 20-year low in April 2003.

Japan's central bankers tried (and keep trying) every monetary policy trick in the book. And when those policies appeared to be working, they spoke with just as much confidence as Mr. Greenspan has.

Policymakers can't come to your rescue -- no one can take better care of your financial future than you can. Investors who don't give in to false hope can take advantage of real opportunities.

Back to homepage

Leave a comment

Leave a comment