Inflation reaches 1974 levels in some key large markets

<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 inflation is getting a renewed push higher by more commodity price rises.</p><p>Inflation expectations reached 5.2% in the coming year in the US, according to <a href="https://www.newyorkfed.org/newsevents/news/research/2021/20210913" target="_blank"><strong>the latest Fed survey</strong></a>. That is a new record high for this survey. In three years, these expectations are up to 4.0%. The same survey shows that median year-ahead home price change expectations decreased slightly to 5.9% in August from 6.0% in July, marking the third consecutive monthly decline.</p><p>The US <a href="https://fiscal.treasury.gov/files/reports-statements/mts/mts0821.pdf" target="_blank"><strong>monthly Budget outcome</strong></a> for August was a deficit if -US$171 bln and almost exactly as analysts had expected. That puts the full 12 month deficit at -US$2.8 tln and falling. This is -12.5% of US GDP. (Last year to August it was -15.0% of GDP. Pre-pandemic it was -4.5% of GDP. New Zealand is currently running a Crown deficit at about -3.6% of GDP.) </p><p>In China, they are battling a raft of high-profile bankruptcies and stresses especially in their property development sector. <a href="https://www.caixinglobal.com/2021-09-14/evergrande-offers-retail-investors-three-payment-options-101772777.html" target="_blank"><strong>Evergrande</strong></a> is the most prominent, but <a href="https://www.caixinglobal.com/2021-09-13/soho-chinas-shares-plummet-after-blackstone-abandons-3-billion-takeover-101772697.html" target="_blank"><strong>Soho</strong></a> has taken a heavy knock. And of course <a href="https://www.caixinglobal.com/2021-09-13/bankrupt-hna-secures-strategic-investors-for-airline-airport-businesses-101772716.html" target="_blank"><strong>HNA</strong></a> is still working its way through its c