Last week's economic reports show that the economies of Europe and the United States continue to recover but that of Japan appears to be turning back down.
In Europe, the European Commission's monthly sentiment survey showed that confidence improved again in October. The Economic Sentiment Indicator for the European Union rose to 104.1 in October from 103.6 in September while for the euro area, it rose to 104.1 from 103.2.
In the US, real gross domestic product grew at a 2.0 percent annual rate in the third quarter, faster than the 1.7 percent rate in the second quarter. If the US economy continues to grow at the third quarter rate, real GDP will regain its 2007 peak by the first quarter of 2011.
However, US real GDP growth so far has relied to a large extent on inventory accumulation. Real private inventories contributed 1.44 percentage points to third-quarter growth. Real final sales of domestic product -- GDP less change in private inventories -- increased just 0.6 percent in the third quarter, down from 0.9 percent in the second quarter.
If the US economy grows at the third quarter's growth rate of final sales, real GDP will take more than another year to regain its 2007 peak.
In Japan, industrial production fell 1.9 percent in September, the fourth consecutive monthly fall. A survey by the Ministry of Economy, Trade and Industry showed that production is projected to fall again by 3.6 percent in October before increasing by 1.7 percent in November.
The trend in Japanese industrial production is looking ominously similar to that in early 2008 near the beginning of the last recession.
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