China in a tough spot

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news</p><p>China is facing a very tough period trying to fix its broken pandemic response.</p><p>But first, new <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20222360.pdf"><strong>US jobless claims</strong></a> were little-changed last week at 248,000 with 1.6 mln people on these benefits out of a total workforce of 165 mln people.</p><p>The <a href="https://www.bea.gov/news/2022/gross-domestic-product-third-estimate-gdp-industry-and-corporate-profits-revised-third" target="_blank"><strong>final Q3 GDP growth measure</strong></a> for the US came in at +3.2%, topping earlier estimates and topping analysts expectations. Driving this revision was more actual consumer spending activity that earlier estimated. You may recall that prior to the first estimate, there were fears Q3 would show a decrease, but the facts proved the pessimists wrong. Of course they have turned their pessimism to the future and ignore their prior error.</p><p>This strong data, along with the continuing strong labour market, means the US Fed is far from finished with its rate hikes and there is likely to be more monetary tightening. This conclusion has caused Wall Street to retreat rather sharply today. The Nasdaq is particularly hard hit.</p><p>After a historically low rate of change between 2020 and 2021, the American population increased by +0.4%, or 1,256,003, to <a href="https://www.census.gov/newsroom/press-releases/2022/2022-population-estimates.html" target="_blank"><strong>333,287,557 in 2022</strong></a>. Basically this is because they welcomed 1 mln immigrants this year. For reference, the New Zealand population is growing by +0.2%.</p><p>In Japan, the bond market has begun to price in the consequences of the Bank of Japan's decision to give interest rates more freedom