Japan's Economic Boom Hits Snag as Inflation Erodes Household Gains

The Japanese economy has been experiencing an unprecedented expansionary phase that is likely to surpass the longest period of growth since World War II. According to preliminary government statistics, the country's economic expansion has lasted for 74 months through July, a highly impressive feat considering the global economic landscape. The ongoing boom, which started in February 2002 and ended in February 2008, was previously considered the longest period of growth since the end of World War II.

Despite the nominal gross domestic product increasing during this expansionary phase, inflation has been a major concern for households. With inflation-adjusted real wages failing to grow markedly, it is difficult for individuals to feel the economic expansion. Corporate profits have hit record highs due in part to the yen's sharp depreciation, but this benefit does not seem to be trickling down to consumers.

The index of coincident economic indicators has continued to improve, according to preliminary data released by the Cabinet Office on September 7. A panel of experts will formally decide whether the current expansionary phase is indeed the longest since the end of the war based on their discussions under the government agency in charge of determining the economy's cyclical peaks and troughs.