Tags: Shilling | us | Japan | economy | recession

Gary Shilling: Japanese-Style Downturn to Hit US

Wednesday, 05 Oct 2011 08:12 AM

The United States can expect a downturn similar to the one that gripped Japan for decades, marked by alternating periods of slow growth and recession, says author and economist A. Gary Shilling.

The U.S. economy resembles Japan's in many ways, especially when it comes to sluggish growth rates, Shilling writes in a Christian Science Monitor piece.

However, Japan runs a more export-led economy, while high savings rates and low imports created a bond market with very low government yields.

Demand for U.S. Treasury bonds and notes remains high due to the import-fueled nature of the U.S. economy, as those who send their products to the U.S. tend to reinvest in dollar-denominated government debt with the greenbacks they earn.

"I think the differences between the U.S. and Japan are too great to use the Japanese economic experience in the last two decades as a template for the U.S. in coming years, although I expect a Japan-like lengthy period of slow growth and deflation as America works down its debts," Shilling writes.

"And I doubt U.S. policymakers can forestall the trend – any more than Japan has been able to generate robust economic growth."

Some say the U.S. needs to spend more to escape a Japanese-like downturn, including Richard Koo, chief economist for the Nomura Research Institute, a Japanese think tank, who says President Barack Obama's stimulus measures didn't go far enough.

"Obama kept the economy from falling into a Great Depression. But you never become a hero avoiding a crisis," Koo tells Money Magazine.

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The United States can expect a downturn similar to the one that gripped Japan for decades, marked by alternating periods of slow growth and recession, says author and economist A. Gary Shilling. The U.S. economy resembles Japan's in many ways, especially when it comes to...
Shilling,us,Japan,economy,recession
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2011-12-05
Wednesday, 05 Oct 2011 08:12 AM
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