USA is just like Japan? Not so fast!

During these so-called struggling economic times, various comparisons of the United States and Japan have been made. In fact, I found myself asking a Mortgage Back Security Portfolio manager from Colombia Management last week if the US was headed down a Japan like Quantitative Easing, a story for another time.

Certainly we have similarities, and the concern is that Japan has been in an anemic economic growth patter for several decades. As the US begins to pull out of the latest deep recession, it is inevitable to make a similar fearful comparison of a Japan like extended recovery. As a side note the Japanese government has cut the path for Quantitative Easing and as of this time, Bernanke has attacked the lingering effects of the latest recession with the exact same sword, again I digress.

We think the US does not have the same extended recovery issues as Japan and here is why:

Japan’s population growth


USA population growth


These are the same time periods and from the same source!

There is an elephant in the population room that no one is talking about.  In order for economic growth to occur, there must be, to some extent in a modern society, population growth. As you can tell the demographics are much different in the US and Japan, leading to much of the difficult economic resurrection issues of Japan, in our opinion. For those strongly opposed to more open immigration policies, take note, again a topic for another time!

In addition to the afore-mentioned population growth, the Japanese population are tremendous savers, 2 to 3 x the US mean population. While saving it great, it is also a muzzle on economic growth as money is siphoned out of the system, retarding growth.

So the next time you see or hear comments like…”The US is just like Japan” remember the elephant in the room for Japan, its declining population.

Have a Great Day!


PS I have just begun using a new economic data system that has a huge amount of options for analysis….apologies in advance….nerds and their graphs!!

PSS The four-hour dragon remains safe as the last race of the year rendered her untouchable, at least by this rhino……Oh….and here in my favorite sign from the race.marathonworstparade

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