In other words, a decline in domestic demand as a result of a real income drop (the Keynesian effect) appears to have exceeded an increase in domestic demand driven by the improved sentiment toward the sustainability of the fiscal balance and the social security system (the non-Keynesian effect). In addition, bad weather conditions adversely affected private consumption in JulyOctober 2014.
Thereafter, however, private consumption started to recover gradually as the adverse impact of the tax hike waned. Residential investment also appears to have more or less bottomed out. Second, the sharp depreciation of the yen brought only a limited gain in export volume, thus failing to offset a substantial decline in domestic demand caused by the tax hike.