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Back down to earth in Q3

Japan’s economy was always likely to slow in the third quarter after the surge of output it generated in the second. But the latest data have still been rather disappointing. While investment remains strong, industrial output may have contracted, consumer spending was flat, and net trade doesn’t appear to have provided much support either. The lack of vitality in consumer spending is a particular puzzle given that, on paper, just about everything is going right for households at the moment, with unemployment at historic lows and wage growth finally picking up.

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