“A Closer Look at Japan’s Rising Consumption Tax”

That’s an important new Economic Brief by Thomas A. Lubik and Karl Rhodes of the Federal Reserve Bank of Richmond:

Japan plans to raise its national consumption tax next week from 8 percent to 10 percent. Some commentators and economists have blamed previous consumption tax increases for causing recessions in 1997 and 2014, but little statistical analysis has been published to support or refute such claims. This Economic Brief  highlights new evidence that significant changes in Japan’s household consumption behavior did in fact coincide with the 1997 tax hike.

This issue is important as Japan is on the cusp of raising its consumption tax in just a few days.

Real Housing Prices Stabilizing … or Falling

Case-Shiller through July, Zillow through August.

Figure 1: Case-Shiller 20 city home price index (blue, left log scale), Zillow forecast of Case-Shiller August value (blue +, left log scale), and Zillow single-family home prices (brown, right log scale). Source: S&P via FRED, Zillow, BLS, and author’s calculations.

As Calculated Risk notes, Zillow makes predictions for the Case-Shiller index. They forecast the August 2019 m/m growth rate (not annualized) in the 20 city composite at -0.1% (roughly -1.2% on an annualized basis). The forecast is shown in Figure 1 as a “+”.

New home sales depict a much more optimistic picture, as Calculated Risk discusses.

Is California in Recession? (Part XVIII)

June employment figures are out. Time to re-evaluate this assessment from over one and a half years ago in Political Calculations that California was in recession.

Going by these [household survey based labor market] measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis. [text as accessed on 12/27/2017]

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