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Investing

Japan: Unemployment Still The Rub

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By Douglas A. McIntyre Updated Published

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Unemployment in Japan moved up to 5% in April. That may not seem like much to Americans, but in the world’s second largest economy it is like a 10% figure would be in the US.

Factory production was up 5.2% in April. That increase, over March, was the largest jump in 56 years. Nonetheless, production is still low by historical standards.

Japan may be a canary in the coal mine for the US. Household spending in the Asian nation is falling and there are concerns about deflation returning. It crippled the Japanese economy for almost a decade beginning in the 1990s. American policy makers believe that they can increase interest rates and manipulate the money supply to keep the US economy working at a low level of inflation, perhaps 2%.

But, the Fed’s plans to fight off a period of deflation cannot be entirely adjusted for a situation in which 10% or more of Americans are out of work for several quarters. That would be unprecedented in modern times and it would undercut consumer spending at an unimaginable rate.

American policymakers say that the US will never face the challenges that Japan faces. It is hard to imagine why they think that they have more control over the situation than the Japanese central bank does.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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