The Katy Perry Economy: Japan Is Hot and Then Cold

Tax changes bring booms and busts in spending

Katy Perry in Guangzhou, Guangdong province of China.

Photograph: ChinaFotoPress via Getty Images

Japan, like Katy Perry's Hot N Cold hit song, just can't get off this ride. Because of the roller coaster effect from a sales-tax boost, it saw growth and then contraction in 2014. Now it looks like it'll happen again.

The last time Japan hiked its sales tax, consumers rushed in to make big-ticket purchases of everything from condominiums to cars before the levy went up, and then fled the market.

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