Climate and economic activity heating up

<p>Kia ora,</p><p>Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect 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 the American middle classes are expecting significantly higher pay and higher costs in 2021.</p><p>But we start today noting the <a href="https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_Full_Report.pdf" target="_blank"><strong>IPCC's latest peer-reviewed update</strong></a>, which says there’s already enough greenhouse gas in the air to heat the planet by 1.5°C - which is thought to be a climate tipping point. For New Zealand, they forecast more rain in the south and west of the country, less in the north and east. They also expect more river flooding, and faster glacier retreats, with them likely to disappear during this century.</p><p>Elsewhere, the latest New York Fed <a href="https://www.newyorkfed.org/newsevents/news/research/2021/20210809" target="_blank"><strong>consumer expectations survey</strong></a> for July shows consumer price inflation expectations are firmly anchored at a high +4.8% for the next year. However the same survey reveals households' expectations for year-ahead earnings growth and the likelihood of finding a job, rose sharply in July. Medium-term inflation expectation ticked up to +3.7% in three years. While remaining elevated, home price growth expectations declined to +6.0% over the coming year. Across the board, Americans expect to pay sharply more in the coming year for everything, and but expect their pay to rise only +2.9% to match that. While such surveys rarely work out with these signals, these expectations do strongly affect how people plan and react.</p><p>There is some evidence Americans may be underestimating their pay prospects. The latest <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank"><strong>JOLTS survey</strong></a> (for June) shows there is a surge in both job openings and quits, suggesting tha