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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

New Data Casts Doubt on Japan's Economy [AP]

Summary: The economic data out of Japan is causing concern because of a consistent slowing in consumer spending -- it fell more than 3x the amount it was expected, 6.6% y-o-y, for the ninth-consecutive monthly y-o-y decline. Also, unemployment rose by 0.1% over August to 4.2%. Despite the increase, Bloomberg quotes Merrill Lynch Tokyo chief economist Jesper Koll, who said, "The stickiness of the unemployment rate at about 4 percent is a sign of strength. The question is how many jobs are being created." Bloomberg notes the jobs-to-applicants-ratio was steady at 1.08 in September, near a 14-year high set in July. Government officials remain optimistic on the state of the economy. Some analysts and economists however, are worried, such as Morgan Stanley's Masaaki Kanno, who said, 'consumer spending remains the worrisome wild card in Japan's economic comeback.' Hiroshi Shiraishi of Lehman Brothers commented, "The data point to the economy losing some momentum and are a bit of a warning sign at a time when the Bank of Japan is inching toward raising interest rates." Meanwhile, the Bank of Japan's closely watched semiannual Outlook for Economic Activity and Prices report was released today. It confirmed Japan's continued economic expansion, while acknowledging the corporate sector has been "somewhat stronger than projected," whereas the household sector has been "somewhat weaker." GDP is forecast to decline to around 2% from 2.5% in FY2007 and hold steady. Core CPI is seen at around 0.5% in 2007, 0.3% lower than projected in its April report.
Related links: Bloomberg: Japan's Jobless Rate Rises; Jobs Available Near 14-Year High • Bank of Japan: Outlook for Economic Activity and PricesWeak Core CPI Keeps Pressure on BoJ to Hold RatesBoJ Keeps Rate Unchanged; Producer Prices Up SharplyBoJ's Tankan Surprises to Upside, Investment Implications
Potentially impacted stocks and ETFs: iShares MSCI Japan Index ETF (NYSEARCA:EWJ)

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Source: Sluggish Consumer Spending Dampens Japan's Economic Expansion