Aussie closes in on top 10; US population up +2.7 mln; US housing stock up +US$2 tln; US driver shortage; China freezes; aluminium prices jump; UST 10yr yield 2.43%; oil stable, gold up; NZ$1 = 70.8 USc; bitcoin falls -US$1000

Here's our summary of key events overnight that affect New Zealand, with news that demographics are inexorably changing the world's economic power structure.

A new report suggests Australia is climbing up the ranks of the world's largest economies. It is currently 13th, and this report says it will grow to be #11 by 2026. Behind the expansion is a steady population growth of +1.3% per year. The researchers say by 2030, China may replace the US as #1, and the next two will be Japan and India, shifting the economic centre of the world to Asia.

In the US, their population grew by +2.7 mln in 2017 to 327 mln, the world's third largest, after China (#1, growth +0.5% pa) and India (#2, growth +1.2%). The US has a +0.7% population growth rate (and compares with New Zealand's +2.1% growth). Net migration added more than +1 mln people to the US in 2017. The same agency estimates the world population is now 7.44 bln, a growth or about +1.1% in 2017.

And the value of the entire American housing stock increased by +6.5% in 2017, up by US$2 tln, according to a report. All homes in the country are now worth a cumulative US$31.8 tln.

And it turns out, New Zealand isn't the only country facing a truck driver shortage. The US is as well and strong holiday retail demand pushed up freight volumes, leading to an acute driver shortage there. Pay rates are reported to be rising fast. The situation is adding urgency to developing driverless truck technology.

Much of the Northern hemisphere is in winter's icy grip. That is true in China too where efforts to clean up the air are backfiring. Clampdowns on coal-fired power generators are being eased because imports of natural gas are down sharply, all to keep a bad situation in some regions from getting worse. Still, Beijing has unusually clean air this winter, although that progress doesn't extend to most other cities.

We have previously noted the sharp, sudden rise in copper prices; we should also note that aluminium prices are also rising fast. They are now at USD levels we haven't seen in five years, rebounding sharply in the past few days. Chinese industrial cutbacks to control pollution and redirect electricity for home heating are behind the sudden move.

The UST 10yr yield has risen slightly to 2.43% today (+1 bp). In China, the equivalent 10yr sovereign bond is yielding 3.91% (unchanged) while the equivalent NZ 10yr sovereign bond is yielding 2.72% (-3 bps).

Oil prices are marginally higher in the US today with the WTI benchmark at just over US$59.50 a barrel, while the Brent benchmark is just under US$66.50. That is near its recent highs buoyed by data that shows strong Chinese demand for crude imports and on increased refining activity in the United States that drew more crude from inventories.

Gold is up +US$7 to US$1,293/oz.

This morning the Kiwi dollar is little changed at just under 70.8 USc, and on the cross rates it is at 90.9 AUc, and against the euro it's at 59.2 euro cents. That puts the TWI-5 still at 73.3.

Bitcoin is down another -US$1,000 today on top of yesterday's -US$700 and now at US$13,920, a -7% fall on the day. Considering it almost hit US$20,000 on December 17, that is a slump from then of -30% in just 12 days.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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10 Comments

"The researchers say by 2030, China may replace the US as #1, and the next two will be Japan and India, shifting the economic centre of the world to Asia."

Yes China is a possibility to pass US; doubtful about India but definitely not Japan.

Many r unaware of the next Big thing - India.
Historically - India has been a disappointment, gave hope, fall short, repeat.
But not the same scenario this time with the leader working like an extremely efficient CEO.
IMF & World Bank have revised their growth projections about India just last week.

Everyone appreciates China's growth over the last three decades but Japan started earlier and has quite an advantage for China to catch up. From the '.ifitweremyhome.com' website:-
If China were your home instead of Japan you would...
die 9.31 years sooner
be 6.9 times more likely to die in infancy
make 73.58% less money
be 2.4 times more likely to be in prison
spend 93.23% less money on health care
be 2.7 times more likely to be murdered
I don't know either country but I doubt China can catch up with Japan for lifestyle in only 13 years - quadrupling average salary in 13 years would be impressive.

If pay rates are reported to be rising fast for truck drivers in the US in response to scarcity, I wonder if there is any evidence of rising pay rates in New Zealand?

USA : Scarcity --> wage rise
NZ : Scarcity --> more immigration. Result stagnant wages at the bottom.

And in Aussie (from section on Aussie in this article) :

"Behind the expansion is a steady population growth of +1.3% per year. "

Immigration driven GDP growth, same as we have here. So stupid IMHO.

Only some of the population increase is net migration gain. The rest about half is from natural increase.

Fake. Propaganda. Misinformation.

In the year to June 2017 the population grew by 100,400, the biggest ever increase for a June year. Net migration, being arrivals minus departures, contributed 72,300 people, with the balance of 28,100 stemming from natural increase, being births minus deaths

https://www.interest.co.nz/news/89300/net-migration-fuelled-population-g...

Immigrants tend to be in the family forming years - they produce children. In the past those children grew up as Kiwis but as Prof Spoonley pointed out now NZ born children can grow up speaking their parents language at home (no change) but also watching TV; internet viewing, attending pre-school, even library rhymetime, computer gaming immersed in their parents culture only. Only school brings them into contact with other Kiwis and because immigrant families tend to clump together we now have schools that are predominately PI and soon there will be an Auckland college that is 50% Chinese.