In its Monthly Economic Report for January, the government maintained its assessment of the nation’s economic health, reiterating that the economy is “recovering at a moderate pace.”

This assessment means it is likely the government will declare that the Japanese economy, which started recovering in December 2012, has extended its expansion streak to the 74th month, achieving the longest postwar run of growth. The previous record was 73 months between February 2002 and February 2008.

It will be a while before the final verdict is handed down, but the lengthy economic recovery deserves a celebration.

Deflationary pressures have eased considerably, if not disappeared completely, while the employment situation has improved markedly.

Corporate Japan has shown strong earnings performances in the past several years, thanks partly to a healthy world economy and the yen’s weakness. The effects of the favorable economic factors are spilling over into smaller companies and businesses in rural areas.

But the rates of Japan’s economic growth have been far from impressive. During the more than six years of continued growth, Japan’s gross domestic product has increased at an average annual rate of around 1.2 percent in real terms, compared with the 1.6 percent rise registered during the period until February 2008.

In particular, growth in household spending has been very weak.

Despite the extended period of economic recovery, it is hard to claim that the virtuous cycle of growth has kicked in.

If robust corporate earnings have not accelerated growth in household outlays, attention should be focused on wages, which should translate higher business profits into increased consumer spending.

The serious damage that has been caused to the credibility of key wage statistics by a scandal involving the labor ministry’s unauthorized data gathering methods has grave implications for assessments of the nation’s macroeconomic conditions and related policy decisions.

Fixing problems behind the faulty data scandal to restore the credibility of the statistics is a matter of great urgency from this point of view as well.

Various economic indicators have portrayed Japan Inc. as surprisingly unwilling to raise wages despite its solid earnings and labor shortage.

If the rate of base pay growth is lower than the inflation rate, real wages, or wages adjusted for inflation, decline.

Although many companies say they intend to increase bonuses, instead of basic pay, to return profits to employees, people are unlikely to increase their daily spending when their real wages are falling.

In the early stages of economic recovery, it is not uncommon for the labor share or real wages to decline. But this situation has lasted for far too long in Japan, which explains why so many Japanese are not feeling the effects of the economic recovery.

Both the business community and the government should confront this reality.

There are also plenty of concerns about the prospects for the economy. The trade war between the United States and China is muddying the outlook of external demand.

China has started taking policy measures to shore up its flagging economic growth, while the U.S. Federal Reserve has stopped raising interest rates. But it is difficult to estimate the actual effects on the Japanese economy of these and other international developments including currency market trends.

If, however, companies become too pessimistic about the future course of the nation’s economy and start reining in wage hikes and capital investment, they could create problems for themselves.

Prime Minister Shinzo Abe’s administration has been trumpeting its economic policy achievements, stressing the fact that the current run of economic growth started simultaneously with Abe’s return to power in December 2012.

But Japan’s economic growth has remained moderate at best, while dark clouds are gathering over the horizon at a time when there is little room for additional fiscal or monetary policy stimulus.

The real test of the administration’s economic policy prowess will come in the coming months.

--The Asahi Shimbun, Feb. 3