By Shigeo Kodama, BridgeNews
Tokyo--Jan. 30--Taro Aso, Minister of State for Economic and Fiscal Policy, said Tuesday it is still possible to meet the government gross domestic product target of 1.2% for this fiscal year, although household spending data for October-December suggest a drop in personal consumption in GDP. He also welcomed possible rate cut by the Federal Reserve Board, saying the expected cut will "not be negative" for the Japan economy.
* * * Seasonally-adjusted October-December household spending by wage earners, which is used in estimating consumption in GDP data, was down 0.5% on quarter, the Ministry of Public Management, Home Affairs, Posts and Telecommunications announced Tuesday. Personal consumption accounts for about 55% of the GDP.
Also, Aso said rate cut by 0.5% point by Fed at the Federal Open Market Committee meeting this week, if actually implemented, would be "a major decision to enable soft-landing of the U.S. economy."
The Ministry also said the household spending by wage earners posted falls for three straight years through 2000. However, Aso said he feels consumption is leveling, not falling, factoring in the recent declines in prices.
His comment indicates sales of goods on value basis were down due to price declines, but their sales on volume basis remains unchanged, indicating that the strength of consumers' demand remains intact.
Aso also admitted the recent sluggish stock prices were a negative factor, dampening consumers' sentiments, and added that reshuffle of components of the Nikkei Stock Average, implemented last year, was partially responsible for dampening the sentiments.
He said new index was moving around 13,000 yen recently, while the index before the reshuffle, if calculated currently, would have been near 16,000 yen.
Thus, the new index has more of a negative impact on the sentiments than the old one, he said.
Meanwhile, Aso said he would like to have the third meeting of the Council for Economic and Fiscal Policy in late Friday evening. End