One powerful case against the idea that the stamp duty holiday was a dominant driver in the UK's record breaking year in the housing market was the fact that similar rises in prices were occurring in markets with no tax break - see that Resolution Foundation study we covered last week.
S&P CoreLogic Case-Shiller data published yesterday revealed US house prices rose 18.2% in the year to June, the largest growth in more than 30 years. Again, ultra-low mortgage rates and a shift in demand for larger homes were the big drivers, though like in the UK and elsewhere, tight supply and cost inflation have played their part. See also data from Australia, published this morning, showing house prices up 18.4% during the year, the most since 1989.
It's against this backdrop that the Jackson Hole virtual Fed conference took place last week and the impact of more than a decade of ultra-loose monetary policy was naturally a topic of focus - particularly what, if anything, could lead to a sustained reversal in the downward path of interest rates.
One of the most compelling theories from the economists Charles Goodhart and Manoj Pradhan suggests that, as the world's population ages, saving for retirement will tip over into increased spending. That would spark inflation, leading the world's central banks to begin raising interest rates.
New research published during the conference pours cold water on that idea. The FT's Robin Harding has a good piece on the various studies this morning. In short, economists Adrien Auclert, Hannes Malmberg, Frédéric Martenet and Matthew Rognlie argue that, though the elderly will spend their accrued savings, ageing by-and-large reduces growth and lowers demand for investment, suggesting low interest rates are here to stay.
Another study suggests that rising inequality will keep pressure on central banks to keep interest rates near their current floor. More savings relative to spending incentivizes central banks to cut interest rates, so pressure to hold interest rates low will climb in tandem with households' accrual of wealth, or so the theory goes…
Leaders of the world's biggest companies say their confidence about the future is now back at pre-pandemic levels and nine in ten say they'll begin making acquisitions in the next three years.
The KPMG study of 1,325 chief executives of companies with annual revenues of more than $500 million found 60% were confident about the global economy over the next three years, up from 42% in a similar survey in early 2021.
In other news...
In a new Rural Market Update, Andrew Shirley covers labor shortages and biodiversity targets.
Elsewhere - Eurozone inflation hits 3%, one in four bosses say Zoom call gaffes led to someone getting fired, China moves to cap the cost of renting a home in cities, property funds aiming to attract ethical investors, Google delays return to the office until January, and finally, a look at the winners of remote work.