Fast demographic changes alter economic prospects

<p>Kia ora,</p><p>Welcome to Wednesday'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 economic recovery in China and the First World faces long-term demographic challenges that just got much more severe.</p><p>But first, the latest <a href="https://conference-board.org/data/consumerconfidence.cfm" target="_blank"><strong>survey</strong></a> of American consumer sentiment, this one by the Conference Board, is much more upbeat than was expected. It rose sharply again in April, following the substantial gain in March, and is back to pre-pandemic levels. Consumers were more upbeat about their income prospects, perhaps due to the improving job market and the recent round of stimulus payments. Vacation intentions posted a healthy increase.</p><p>The next regional Fed factory survey, <a href="https://www.richmondfed.org/-/media/richmondfedorg/research/regional_economy/surveys_of_business_conditions/manufacturing/2021/pdf/mfg_04_27_21.pdf" target="_blank"><strong>this one</strong></a> from the mid-Atlantic states, is solidly expansionary, but not more so in April than March. However, the standout feature of this survey was the sharp rise in inflation trends, with most of these rising costs being passed on to customers.</p><p>We should also note that the latest <a href="https://www.atlantafed.org/cqer/research/gdpnow" target="_blank"><strong>Q1-2021 growth estimates</strong></a> for the US are even more bullish than previously estimated.</p><p>There was another huge <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210427_3.pdf" target="_blank"><strong>US Treasury bond auction</strong></a> today, this time US$62 bln of 7 year Notes. It was also well supported with $143 bln in bid tenders. The median yield was slightly higher than the last equivalent event at 1.25%.</p><p>Eyes are now turning to the imminent US <a href="https://www.fede