Japanese deflation moderates, US GDP growth revised up

The earthquake may accelerate Japan's exit from consumer price deflation. From Bloomberg on Friday:

Japan’s deflation moderated in February even before the country’s worst earthquake on record and an ensuing tsunami and nuclear crisis this month push up energy and food costs.

Consumer prices excluding fresh food declined 0.3 percent from a year earlier, the statistics bureau said today in Tokyo, matching the median estimate of 23 economists surveyed by Bloomberg News.

The March 11 disaster may cause Japan’s gross domestic product to shrink by as much 12 percent on an annualized basis in the second quarter, Morgan Stanley MUFG Securities Co. predicted. The shortage of daily necessities caused by the magnitude-9.0 quake may push up prices, while the weakening economy may dampen consumption and slump price gains, said economist Yoshiki Shinke.

Meanwhile, the US reported mixed economic data on Friday. From Reuters:

The U.S. economy grew more quickly than previously thought in the fourth quarter, the government said on Friday, but signs of softer consumer and business spending may slow its momentum in early 2011.

Another report showed consumers in March were their most downbeat in over a year as food and gasoline prices jumped.

Gross domestic product rose at an annualized rate of 3.1 percent, the Commerce Department said in its final estimate, revised up from 2.8 percent...

The Thomson Reuters/University of Michigan index on consumer sentiment fell to 67.5 this month, the lowest since November 2009, from 68.2 in early March and 77.5 in February.

Also falling this month was German business confidence. Bloomberg reports:

German business confidence fell less than economists forecast in March, suggesting Japan’s earthquake and higher borrowing costs may not damp growth in Europe’s largest economy.

The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, declined to 111.1 from 111.3 in February, which was the highest reading since records for a reunified Germany began in 1991. Economists expected a drop to 110.5, according to the median of 39 forecasts in a Bloomberg News survey.