The U.S. Housing Market Collapse and Adjustment of Household Balance Sheets-Medium-term Economic Forecast

Economic Research Department  Executive research fellow Koichi Haji 


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Amid the global economic turmoil triggered by the U.S. subprime mortgage crisis, we predict Japan’s economy will average only 1.0% real growth annually over the next five years, well below its potential growth rate. In the U.S., balance sheet adjustment in the household sector will constrain consumption even after the financial crisis ends, slowing the growth of emerging economies. In the second five-year period, despite a global recovery, Japan’s economy will temporarily stall due to consumption tax rate hikes, reducing the annual real growth rate to 1.5%, again below the potential growth rate.

Economic Research Department    Executive research fellow

Koichi Haji

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