If you wonder what haunts Federal Reserve Chairman Ben Bernanke’s dreams, it’s Japan.
Japan has suffered more than two decades of subpar economic growth, made all the more miserable by falling consumer prices, a stagnant real estate market and a moribund stock market. The worry: that the U.S. economy devolves into something like Japan’s.
Some of the similarities between Japan’s economic woes and the U.S.’ are striking. Both countries have aging populations. Both have ultra-low interest rates, which don’t seem to be having much effect in stimulating the economy. And both countries are struggling with high debt load
Deutsche Bank AG’s Ajay Kapur says the U.S. is sliding into an economic malaise similar to Japan’s so-called lost-decade of the 1990s. The Hong Kong-based strategist draws the parallel using similarities in demographics and financial-market performance.
Binky Chadha, head of the bank’s U.S. equity strategy team in New York, and Michael Biggs, one of its London-based economists, disagree, citing variations in the nations’ growth rates and credit demands.
The researchers aired their differences in a 28-page report Deutsche Bank released October 17 and distributed to clients. The debate underscores the uncertainties facing the world’s largest economy. Fifty-six percent of respondents in a quarterly Bloomberg Global Poll of 1,031 investors, analysts and traders said a Japan-like scenario is “very” or “fairly” likely.
New census data released Thursday casts a shadow over the long-term impact of the recession on America’s youth. During the last decade, the unemployment rate for young people spiked to the highest levels since World War II–only 55 percent of Americans aged 16 to 29 have jobs, a 12 percent drop from the employment rate in 2000. Faced with a grim outlook, many young people aren’t leaving home until their 30s–the number of Americans aged 25 to 34 living with their parents jumped 25 percent during the recession. Last month, The New York Times called the collective youth "Generation Limbo," but after seeing the new census data, Harvard economist Richard Freeman takes it a stage further. "These people will be scarred, and they will be called the ‘lost generation’–in that their careers would not be the same way if we had avoided this economic disaster," Freeman told The Associated Press.
The world has seen a number of lost generations in the past century. Gertrude Stein first coined the term in Twenties in reference to the Europeans who grew up during World War I, but it’s most recently referred to Japanese youth who grew up during that country’s recession in the 1990s. In Japan, the lost youth are referred to as the hikikomori, and the decade of widespread unemployment meant that many of them never had the chance to start careers.
With cheerleaders shouting encouragement, more than 1,000 young Japanese trying to break into the job market held a pep rally in Tokyo on Tuesday to underscore what officials say is the bleakest employment outlook Japan has faced in years.
About 1,500 college students crowded into a park to offer each other moral support and appeal for jobs at the rally, which organizers hoped would put the national spotlight on the difficulties job seekers are dealing with in Japan’s once-mighty economy.
"It’s a very tough situation, but I won’t give up," said 19-year-old student Misato Shinotsuka.
A record one-third of Japanese university students graduating this spring have not found jobs, according to a recent survey by the labor and education ministries.