Earlier this week, the UK economy ticked over, by one measure, into deflation.
The rate last dropped below zero in March 1960 when Harold Macmillan was prime minister and John F Kennedy was running for president of the United States. Inflation soon headed back up in the 1960s, but a sustained period of deflation would have serious consequences and could take Britain into the kind of lengthy stagnation seen by Japan in the 1990s and from which it is still suffering.
We’ve just uploaded inflation figures for Japan to Timetric. Looking at this alongside Japan’s macroeconomic indices from the Penn World Tables, you can start to see a picture emerging.
However, if it’s like this prolonged period of low inflation, in blue, and negligible economic growth, in yellow, one could argue that it’s a somewhat scary one.
I wonder how happy the Japanese people were during the stagnation? Stagnation as an idea is almost always a bad thing. Something like sustainably-sized is unconventional, but not obviously more wrong. We don’t describe buildings as stagnant because they’ve not fallen down. So what I was wondering is whether there’s any GNH data from Japan to cross-correlate this with? I guess probably not, as GNH is quite a new idea. But you know the sources better than me!