The correlations also vary and they depend on the historical background, scale, environment, market structure, and corporate structure.

 

It is important to ascertain what it is that constitutes the foundation of the economy.

 

 1970 to 1998

 

	Employee compensation	Operating surplus	Gross domestic product	Private final consumption expenditure	Consumer price index	Sales
Employee compensation	1.00
Operating surplus	0.96	1.00
Gross domestic product	1.00	0.97	1.00
Private final consumption expenditure	1.00	0.96	1.00	1.00
Consumer price index	0.96	0.95	0.96	0.96	1.00
Sales	0.99	0.99	0.99	0.99	0.97	1.00

 

The strong correlations that were seen from the 1970s into the 1980s such as those between employee compensation and private final consumption expenditure, between employee compensation and sales, between and among operating surplus, consumer price index, private final consumption expenditure and sales, as well as between and among gross domestic product, sales, private final consumption expenditure and consumer price index, and between consumer price index and sales have completely ceased to exist after 2000.

 

 1994 to 2013

	Employee compensation	Operating surplus and mixed income	Gross domestic product (production side)	Private final consumption expenditure	Price index	Sales	Operating profit
Employee compensation	1.00
Operating surplus and mixed income	0.06	1.00
Gross domestic product (production side)	0.82	0.56	1.00
Private final consumption expenditure	-0.19	0.30	0.19	1.00
Price index	0.82	-0.17	0.66	0.00	1.00
Sales	0.15	0.41	0.42	0.22	0.07	1.00
Operating profit	-0.41	0.64	0.01	0.52	-0.55	0.53	1.00

 

The economy is based on mutual relationships. If these mutual relationships break down, the economy will not continue to function.

 

In other words, economic indicators do not singly exist on their own.

 

They indicate some sort of mutual relationship. These mutual relationships appear as correlations.

 

To examine these correlations, make the correlations rather than trying to find the correlations. It is meaningful to create the correlations.

 

Losing correlations degrades the economic policy and the rationality and consistency of management. When the correlations between individual elements become weaker, the context from economics and management will be lost.

 

The fact that a correlation does not exist implies that the indicator based on the correlation does not exist, and this means that conventional logic ceases to apply.

 

Therefore, if a correlation weakens, the indicator does not function properly.

 

If a correlation does not exist, it means that the market after the collapse of the bubble economy has fallen from its previous logical state into an illogical space. When this happens, analysis based on conventional indicators becomes meaningless.

 

1960 to 1979

 

 

	Added value	Taxes and dues	Personal property and real estate expenses	Interest paid	Depreciation expenses	Sales, general and administrative expenses
Added value	1.00
Taxes and dues	1.00	1.00
Personal property and real estate rent	1.00	0.99	1.00
Interest paid	0.98	0.97	0.98	1.00
Depreciation expenses	0.99	0.99	0.99	0.98	1.00
Sales, general and administrative expenses	1.00	1.00	1.00	0.97	0.99	1.00

 

1980 to 1999

 

	Added value	Taxes and dues	Personal property and real estate expenses	Interest paid	Depreciation expenses	Sales, general and administrative expenses
Added value	1.00
Taxes and dues	0.99	1.00
Personal property and real estate rent	0.98	0.97	1.00
Interest paid	0.28	0.31	0.15	1.00
Depreciation expenses	0.99	0.98	0.99	0.22	1.00
Sales, general and administrative expenses	0.99	0.98	0.99	0.19	1.00	1.00

 

 

 

 

 2000 to 2013

 

	Added value	Taxes and dues	Personal property and real estate expenses	Interest paid	Depreciation expenses	Sales, general and administrative expenses
Added value	1.00
Taxes and dues	0.47	1.00
Personal property and real estate rent	0.21	0.02	1.00
Interest paid	-0.22	0.22	-0.40	1.00
Depreciation expenses	0.17	0.70	0.15	0.36	1.00
Sales, general and administrative expenses	0.66	0.30	0.63	-0.15	0.25	1.00

 

What was wrong with the bubble economy? The problem is that the correlations between the elements that make up the market have been lost.

 

After the collapse of the bubble economy, the correlations that had controlled the market up to then have broken down.

 

The fact that a correlation does not exist implies that the indicator based on the correlation does not exist, and this means that conventional logic ceases to apply.

 

In other words, it means that the market after the collapse of the bubble economy has fallen from its previous logical state into an illogical space. When this happens, analysis based on conventional indicators becomes meaningless.

 

Correlations are created in the market.

 

Unlike physical phenomena, economic behavior must be done intentionally.

 

In other words, it is natural that intentional acts exist. And that they can be adjusted only through the will of humans. A harmonious result will not occur if they are left alone. Put in another way, these are not random acts.

 

What is important is the background that has been established by those indicators, and the mechanisms that have been established. And what kind of functioning and results are to be produced by changes to the assumptions of those mechanisms.

 

It is necessary to confirm the assumptions that have established the indicators. Among the assumptions that may be considered to have established the indicators are the historical background, scale, industrial structure, systems, measures and so on.

 

The factors that change companies and the market are both internal and external factors. The state of the economy is determined by where the internal factors of companies and the market are, by what the external factors are at work on, and by the correlations formed by these factors.

 

To examine these correlations, make the correlations rather than trying to find the correlations. It is meaningful to create the correlations.