Big Cities & Global Growth

June 7, 2021
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Cities

A big contributor to rising house prices globally has been a mass reassessment of housing needs in the wake of the pandemic, whether that's been buyers seeking home offices, gardens or just to be closer to wide open spaces. That's given rise to questions as to whether meaningful numbers of people are leaving cities permanently, potentially altering the economics of everything from transport to healthcare and real estate.
 
But as economies begin to reopen, we're increasingly seeing evidence to the contrary. The latest example comes from Bloomberg, which has a trove of data on changes of address and mail forwarding from the US Postal Service.
 
Across the US, the number of people making moves they defined as permanent climbed a modest 3% between March 2020 and February 2021. When people did move, they generally didn't go very far. In the 50 most populous cities, for example, 84% of moves were to somewhere within the perimeter of the central metro area.
 
For the biggest cities like London and New York, part of this story is about the mobility of the wealthy who occupy central urban areas. News footage of Manhattan looked deserted for periods in 2020, however there was a 138% spike in temporary moves. These are people who changed their address temporarily with the expressed intention of returning, a theme we'll be exploring further over coming weeks.

Global growth

The OECD this week hiked its forecasts for both global and UK economic growth in light of the successful roll out of vaccines in a handful of developed nations plus the enormous fiscal stimulus in the US.
 
Global economic growth is now expected to be 5.8% this year, a sharp upwards revision from the think tank's December projection of 4.2% growth. Meanwhile, the UK economy is on course to expand 7.2%, up from the December forecast of 5.1%, which would be the strongest year of growth since the second world war.
 
The Euro area rebound is projected to begin in earnest in the second half, culminating in growth of 4.3% in 2021 and 4.4% in 2022. The slower vaccine roll out relative to the UK and US plus high infection rates in some locations is keeping growth in check for the time being, however sentiment is now at a three year high and inflation is gathering pace.
 
Eurozone inflation rose to 2% in May, the first time the rate has surpassed the European Central Bank’s target in more than two years. That will complicate decisions by central bank officials as to how much support the economy warrants in order to keep the recovery on track.

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