Japan has fallen into recession for the third time in a decade. Economists warn that the current recession will be deeper than the one three years ago.
Japan said Friday its economy shrank half a percent in the third quarter of the year. Add that to the previous quarter's contraction and Japan has had two straight periods of negative growth, the usual definition of a recession.
The bad news was generally expected, since the world's second largest economy has been showing signs of weakness for months. Unemployment is at a post-war high, industrial production is weak and bankruptcies are soaring.
Most economists blame the recession on low consumer spending, which continues to weigh on prices. That, coupled with slow worldwide demand for cars, technology and other goods, has harmed even the most resilient Japanese industries.
Government spokesman Yasuo Fukuda says "the government must reassure the public that it is okay to spend. He also says Tokyo will act to encourage people to loosen their purse strings."
The last time Japan fell into recession was in 1998. However, this time, the recession comes as Japan's major export markets also are suffering from economic slowdown. The United States is already in recession and Germany is forecast to fall into one within a few months.
That means that Japan will probably be unable to export its way back to health. It also has few options left to stimulate growth, since interest rates are already at zero and the government has vowed to cut runaway public spending.
Japanese officials downplayed recession concerns Friday. Economy Minister Heizo Takenaka told reporters that the economic growth figures were within expectations.