Since Japan’s latest growth report was apparently disappointing, analysts are fretting over whether Abenomics is “working.” There was an archetypal report this morning on NPR that I cannot find a link to, sadly, but this screenshot from Google News aptly summarizes the zeitgeist:

if only the boj could print bitcoin...


But is this conclusion justified? Let’s ask FRED; here’s the log of Japanese NGDP-per-working-age-person (15-64):

up up and away

Hey – that looks pretty good! That’s 3.5% nominal growth over the past year, which is not explosive, but at least pretty OK. But why does this look so different than the topline number? Because of reasons; demographic ones, specifically:

And the best thing, the very best thing of all, is there's time now... there's all the time I need and all the time I want. Time, time, time. There's time enough at last.

Japan is shrinking, and shrinking pretty quickly, in the non-retiree department, and therefore if productivity-per-worker in Japan remained constant, we would see declining topline growth numbers. Not that the actual facts on the ground are good news for Japan, per se; they’re just different news than “Abenomics isn’t working.”

Moral of the story – always try weighting economic data demographically to get actual insights. Especially Japanese data.