Finance

People walk by a CVS Pharmacy store in the Manhattan borough of New York City.
Shannon Stapleton | Reuters

Check out the companies making headlines in midday trading.
CVS — Shares of the drugstore chain jumped 3.8% to hit a 52-week high after the company said sales will accelerate in the year ahead. CVS will launch new health-care services and combine its drugstores and insurance businesses.

Hormel Foods — Shares of Hormel rose 5.7% after the food producer beat quarterly earnings estimates. The company posted a quarterly profit of 51 cents per share, one cent above the Refinitiv consensus projection. Revenue also topped Wall Street expectations.
RH – The home-furnishings retailer RH soared jumped 9.6% after it reported blowout earnings and revenue that beat forecasts. The company also lifted the low end of its revenue outlook. Guggenheim also reiterated the stock as a best idea saying the “catalyst path remains intact.”
Rent the Runway — Shares of the fashion rental platform fell 3.5% in midday trading after reporting widening third-quarter losses, despite sales that shot up 66% year over year. Among investors’ concerns, Rent the Runway has yet to turn a profit and its active subscriber count has not recovered to pre-pandemic levels.
GameStop — The videogame retailer saw its shares drop more than 6% after the company reported losses that widened in the fiscal third quarter. The company reported that its net loss grew to $105.4 million, or $1.39 per share, from a loss of $18.8 million, or 29 cents per share, a year earlier. The stock, once at the center of the meme stock mania, is still up more than 760% this year.
Lucid Group — Shares of the electric vehicle start-up tanked more than 12% a day after the company announced a proposed $1.75 billion convertible senior notes offering. Lucid also recently revealed that it received a subpoena from the Securities and Exchange Commission “requesting the production of certain documents related to an investigation.”

American Airlines, Boeing – Shares of American Airlines gave up nearly 1% after the company said it’s reducing its flying schedule next summer because it’s awaiting Boeing’s deliveries of its 787 Dreamliners. It also said Boeing plans to compensate the air carrier. Shares of Boeing slid 1.7%.
Southwest Airlines – Shares of Southwest retreated more than 3% after Jefferies downgraded the airline stock, citing persistent inflation weighing on profitability. Jefferies lowered its rating on Southwest to hold from buy and also cut its price target on the stock to $45 per share from $60 per share.
EVgo – Shares of EVgo rallied 7.1% after JPMorgan initiated coverage of the electric vehicle fast-charging service operator with an overweight rating. “We anticipate the company driving outsized revenue growth on rapidly increasing fleet adoption and higher utilization,” JPMorgan noted.
Pfizer – Pfizer shares gained 2% after Wells Fargo initiated coverage of the stock with an overweight rating. The firm said Pfizer’s Covid treatments are here to stay and could continue to drive revenue for the company for “years to come.”
Sunrun, Sunnova – Shares of the solar companies slumped despite JPMorgan naming the stocks as top picks for next year. Sunrun declined 3.8% while Sunnova fell 1.7%.
Solid Power – Shares of electric vehicle battery-cell supplier Solid Power added 6.4% midday. The company debuted on the Nasdaq Thursday morning following the completion of a special purpose acquisition company deal. Solid Power’s investors include Ford and BMW.
— CNBC’s Yun Li, Maggie Fitzgerald and Tanaya Macheel contributed reporting.

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Initial claims for unemployment benefits (a proxy for applications) fell last week to their lowest level since Sept. 6, 1969, according to the Labor Department.
That statistic includes a seasonal adjustment, a standard practice meant to account for labor patterns at different times of year. The Covid pandemic has complicated that adjustment, economists said.
Without that adjustment, claims moved in the opposite direction. They rose by about 64,000 from the prior week, a 29% increase.

A “Now Hiring” sign outside a store on Aug. 16, 2021 in Arlington, Virginia.
OLIVIER DOULIERY | AFP | Getty Images

Claims for unemployment benefits dropped to their lowest level in decades last week. However, that statistic is getting skewed by pandemic-era labor distortions, making it seem a bit rosier than reality, economists said.
There were 184,000 initial claims (a proxy for benefit applications) the week ended Dec. 4, the U.S. Department of Labor said Thursday. That’s 43,000 fewer than the week prior and the lowest level since Sept. 6, 1969.

The report tops another eye-popper just two weeks earlier, when claims also fell to a five-decade low.  

But these data points include a seasonal adjustment, which controls for layoff patterns at various times of year. (For example, layoffs generally rise in construction and agriculture in the colder months.)
Without that tweak, unemployment claims rose by about 64,000 last week (or 29%), to a total 281,000, according to the Labor Department. (This figure represents the true, unadjusted number of benefit applicants.)
How can the seasonally adjusted and unadjusted data move in opposite directions?
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Basically, the Labor Department expected a bigger post-Thanksgiving jump in benefit applications and adjusted accordingly. (It anticipated 42,000 more claims.) That showed up as a large decrease in seasonally adjusted claims.
These seasonal adjustments are standard practice, but the pandemic is complicating the labor dynamic. High Covid case levels fueled by the delta variant — and now concerns over the omicron virus strain — may be sidelining workers or affecting things like child care that affect one’s job prospects, for example.

“It’s not obvious why the seasonal adjustment has struggled in the last few weeks, but weekly [seasonal adjustment] is difficult even in normal times,” said Daniel Zhao, a senior economist at career site Glassdoor.
Similar volatility in unemployment claims is likely throughout December and into January, generally a time when seasonal layoffs and furloughs are elevated, Zhao said.

Steady improvements

This isn’t all to say the labor market seems strong when it’s really weak; it more underscores that the historically low level of unemployment claims shouldn’t necessarily be taken at face value.
In fact, the labor market has been steadily improving.
Weekly initial claims for unemployment benefits (on an unadjusted basis) are about the same as their pre-pandemic level in December 2019. Initial claims for unemployment benefits at the same time last year were more than three times their current level. The U.S. unemployment rate dropped to 4.2% in November, the lowest since February 2020.

Employers are reluctant to lay off workers amid a near-record level of job openings. (There were more than 11 million openings in October, the Labor Department said Wednesday.)
The number of employees who quit their jobs eased off its September record, but remained elevated as workers see ample job opportunity and bargaining power.
“While the latest [unemployment claims] data should be taken with a grain of salt given seasonal adjustments, we may be entering a stretch when lower-than-average layoffs continue until the ‘Great Resignation’ fades,” said Robert Frick, a corporate economist at Navy Federal Credit Union.

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Markets continue to grind higher against a backdrop of uncertainty, and developments on the Covid-19 front, global supply chain problems, persistent high inflation and potential monetary policy tightening from central banks remain key downside risks going into the new year.
Nigel Bolton suggested that while the outlook for equities in 2022 will be more challenging, they will continue to eke out gains so long as real interest rates remain negative.

A sign for BlackRock Inc hangs above their building in New York.
Lucas Jackson | Reuters

LONDON — Stock picking is going to be more important for investors than macroeconomic themes in 2022, according to BlackRock’s Nigel Bolton.
Markets continue to grind higher against a backdrop of uncertainty, and developments on the Covid-19 front, global supply chain problems, persistent high inflation and potential monetary policy tightening from central banks remain key downside risks going into the new year.

Stock markets had led a broad bull run for risk assets over the past 18 months, although the emergence of the new omicron Covid variant recently resurfaced some volatility. Bolton suggested that while the outlook for stocks in 2022 will be more challenging, they will continue to eke out gains so long as real interest rates remain negative.
“That is going to be the key here for, I believe, many many years to come, and that means that I think you still want to be tilted towards risk assets and equities as part of your portfolio, but you have to have much more realistic expectations in terms of amount of return that you are going to get over the next 12 months,” Bolton, who’s the co-chief investment officer of BlackRock’s Fundamental Equity Group, told CNBC’s “Squawk Box Europe” from the Edelman Investor Summit in London on Thursday.

BlackRock expects equities to provide high single-digit returns over the next 12 months, a more modest environment than the rally seen since the start of the pandemic recovery.
Bolton argued that instead of continuing to focus on the value or recovery trade, favoring certain sectors such as financials or energy based on their low valuations and alignment with the economic resurgence, investors will need to take a more nuanced approach in 2022.
“Some of the larger, more incumbent oil companies will be able to change and may have a quite reasonable future from valuation levels that potentially look optically attractive,” he said, adding that there will be “winners” and “losers” within all sectors across the market.

“That is why I think the theme for next year is going to be stock picking. It’s going to be a good market, I believe, for individual stock pickers, less so for top down macro theme guys.”
Supply chain management
Supply chain disruption has been a key concern for companies around the world as resurgent demand outstrips a recovery of supply in light of economies reopening. Bolton said companies that have a diversified supply base, and have treated their suppliers well over the past few years, have shown greater ability to maintain functioning supply chains through tough periods.

“They are actually benefiting in this environment, and I think that environment is going to continue to be a little bit challenging for some time yet, so that diversification of supply is going to be really important,” Bolton said.
“We have moved away from the era of ‘just in time’ to now it is ‘just in case,’ and that will mean slightly higher cost, but I think if you have got that good management control and diversification of supply, you can still do really well in this environment. ”

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AS OFFICE LIFE approaches some sort of new normal, remote working is here to stay. Employers enjoy cost savings as they spend less on desks and floor space. For employees the promise is of time saved: spared of their commute, they can get their work done and focus on their families and hobbies. That, at least, is the idea. But, as many a remote employee knows, the boundary between work and home life can blur.Some governments and employers are trying to restore balance. In November Portugal announced legislation that, according to Ana Mendes Godinho, its labour minister, seeks to make the most of teletrabalho (remote work) while mitigating the downsides. Bosses are now banned from calling their employees “after hours”: those who make contact outside previously agreed times could be fined more than €9,000 ($10,000). Employers are also required to provide remote-working equipment and reimburse electricity and internet costs, and must hold in-person meetings twice a month, to help combat isolation.Several European countries had similar rules in place even before covid-19. In 2017 the “right to disconnect”, which allowed workers to ignore after-hours texts, emails or calls from their bosses without fear of repercussion, took effect in France. Italy followed soon after. Earlier this year Ireland said workers could disregard late emails and calls.Whether legislation can bring hours down, though, is unclear. Ambitious workers have plenty of incentive to pick up a call from their boss long after 5pm has come and gone; by comparison they stand to gain little from reporting violations of the law and landing their employer with a fine.Then there is the practical difficulty of agreeing on when workers should be contactable, something that is often left to be negotiated between employer and employee. In France and Italy there is no obligation to find an agreement. Aside from one widely publicised court decision in 2018 ordering a pest-control company to pay €60,000 to an employee it had required to be reachable at all times in case of an emergency, little has come of the law in France. Even Ms Mendes Godinho’s office communicated with your correspondent at 7pm.Perhaps change must come from within. In Japan, where toiling any less than 50 hours can be interpreted as a lack of commitment to the job, half of all workers were already back in the office at least three days a week by April 2021. But even there employers are responding to workers’ demands for a better work-life balance. Fujitsu, a technology giant, has introduced flexible hours and allows remote work. Elsewhere, the number of chief remote officers is proliferating. But few companies have gone as far as Volkswagen. For the past decade, the German carmaker’s servers have ensured that employees covered by a collective-pay agreement do not receive work emails on their phones between 6.15pm and 7am.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Only disconnect” More

IN THE LATE 1860s, French sailors who had set off from Saigon to find the source of the Mekong river encountered the precipitous Khone Falls between Laos and Cambodia, and realised that the waters would be impassable for larger trading vessels. Their dreams of reaching the riches of southern China by river were dashed. Quixotic plans for rail networks followed, first from British and French imperialists, and then from the Association of South-East Asian Nations (ASEAN), which in 1995 outlined its ambition to connect Singapore with Kunming, in China’s Yunnan province.On December 3rd, at long last, a portion of those aspirations was realised. A high-speed rail line connecting Kunming to Vientiane, the capital of Laos, was opened after five years of construction. The route is part of China’s Belt and Road Initiative, and the completed section comes with a hefty price tag of $5.9bn—equivalent to nearly a third of Laos’s annual GDP before the pandemic.For China, the rationale for closer links with South-East Asia is clear. Rising factory wages at home make the case for moving low-complexity manufacturing to cheaper nearby locations. In 2019 Vietnam was China’s fourth-largest trading partner for intermediate goods, between America and India, and up from 15th place a decade ago. China’s intermediate-goods trade with Cambodia and Laos has risen nine- and 11-fold, respectively, in the same time.The strategy has historical precedent. Until the 1970s Japanese firms’ main interest in South-East Asia was buying raw materials. Then they began moving production to the region. The shift took off after the Plaza Accord of 1985, at which Japan agreed to let the yen appreciate, which widened the gap between domestic wages and those in low-cost countries. Firms were able to preserve their competitive advantage by moving, while also fostering technological expertise elsewhere.What does the new train line mean for Laos? The landlocked country suffers most from South-East Asia’s limited connectivity. The World Bank has been cautiously optimistic about the new route: Vientiane, it reckons, could become a logistical hub into China from Thai ports, but only if the Lao customs system were made more efficient and connecting roads improved. Although Laos has a land border with Yunnan and no coastline, as recently as 2016 almost two-thirds of its exports to China were transported via maritime routes.Other assessments, however, are less optimistic. A paper published by the Asian Development Bank Institute last year suggested that the investment was unlikely to be profitable given its expense. Opinions of the Belt and Road Initiative have soured since 2016, and fears have risen that the infrastructure acts as a debt trap which gives China influence over borrowers. Laos has assumed 30% of the liability for the project, most of the funding for which was borrowed from the Export-Import Bank of China. Nor will the line bring in Chinese tourists for the foreseeable future, given China’s zero-covid policy.A wider network across the region would yield greater economic benefits for everyone, but that is outside any one country’s control. Thailand approved the first step of a Chinese-built high-speed line in March; it is intended to reach the Lao border at a later stage. Even the first half is not expected to be completed for five years, however, and such schemes often miss their deadline, if they materialise at all. The Malaysian government is studying a high-speed link to Bangkok, but serious discussion has barely begun. Until those longer-term benefits arrive, Laos may mainly be stuck with the bill. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “On the rails” More

BEN BERNANKE, the former chairman of America’s Federal Reserve, entitled his memoir “The Courage To Act”. But a lot of what central bankers do these days is talk. They talk about what they are doing, will do and might do. In central banking, words can speak louder than actions.China is no different. Its macroeconomic policymaking is a combination of acts and signals, execution and exegesis. On December 6th, for example, the People’s Bank of China announced that it was cutting the reserve requirement ratio (the amount of money banks are required to hold in reserve, as a share of deposits) by half a percentage point, from a weighted average of 8.9% to 8.4%. That, it said, would “unleash” about 1.2trn yuan ($190bn) of funding.The cut was, you might think, a straightforward act of easing—an understandable response to a slowing economy, a mutating virus and the financial risks posed by property developers, two of which (Evergrande and Kaisa) defaulted on their offshore bonds, according to Fitch, a rating agency, shortly after the cut.But the decision was accompanied by some cautionary talk. “The stance of sound monetary policy remains unchanged,” the central bank said. It also pointed out that banks will need part of the additional funds (about 80% of them) to repay medium-term loans from the central bank that are due to mature on December 15th. Much of the extra money would, in other words, soon return to the institution that had unleashed it. The impact of the cut “is likely to be neutral”, said one analyst, quoted by Economics Daily, an official newspaper. An editorial in the same paper cautioned against the “relatively simplistic” view that a cut in reserve requirements amounted to “loose” macroeconomic policy.So are China’s policymakers easing or not? The short answer is yes, they are indeed easing. But not without qualms and qualifications. They want to stabilise growth. But they do not want to revive speculation, especially in property. Their expansionary actions are therefore accompanied by a lot of clarificatory and cautionary chitter-chatter.Perhaps the clearest evidence of easing lies not in the deeds of the central bank but in the words of the Politburo, the 25-member body that oversees the Communist Party. After a meeting on December 6th to set the macroeconomic tone for 2022, it emphasised expanding domestic demand and preserving the “six stabilities” (in employment, finance, trade, foreign and domestic investment, and expectations). The Politburo also had some words of comfort for the beleaguered property market. It said the sector should be supported to better serve homebuyers’ “reasonable” demand. (“Reasonable” was not defined. But it is safe to say it does not include buying a property and keeping it vacant in the expectation of selling it for a higher price.)The debate now is not whether China’s policymakers are easing but by how much. Because stimulus can take many forms, especially in China, measuring its overall scale is not easy. One attempt to do so, by Goldman Sachs, a bank, combines indicators of monetary policy (the benchmark lending rate and market rates), credit policy (including reserve requirements), fiscal policy and housing policy into a single index. In the face of the global financial crisis, this index swung by almost 2.9 points on its scale (see chart). It swung by a little over two in response to China’s 2015 slowdown and by a little less than two after the pandemic began.The easing in the first ten months of this year was modest by comparison. The latest reserve requirement cut will add to it, but not by much in itself. Policymakers therefore have plenty of scope to loosen before they can be accused of replicating the “flood” of stimulus in 2008-09, which has acquired a reputation for profligacy, despite its brute effectiveness in returning China to its pre-crisis economic trajectory.If China’s policymakers had an equivalent index of their own, their cautionary talk could be more precisely calibrated. “We may ease by one point but not two,” they might say. In the absence of such a measure, China-watchers have the harder task of inferring macroeconomic intentions from vague party slogans. How many cuts in reserve requirement ratios, one wonders, will be necessary to preserve the six stabilities? ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Is China easing?” More

CENTRAL BANKERS in Frankfurt may be feeling a little discombobulated. Having struggled to revive too-low inflation for the best part of a decade, they now find themselves hoping that too-high inflation will die down. Since the pandemic struck, the European Central Bank (ECB) has bought nearly €2trn ($2.3trn) in government bonds in order to soothe markets and gin up the economy (see chart). Now it must consider whether such quantitative easing (QE) remains appropriate. That involves grappling with two questions at its next policy meeting on December 16th: whether the euro area has truly escaped its low-inflation trap, and whether asset purchases have outlived their usefulness. The first is easier to answer than the second.Inflation in the euro area, as in much of the rest of the world, is soaring. Consumer prices rose by 4.9% in November, compared with a year ago, the fastest pace in the history of the single currency. Many of the ECB’s rich-world counterparts, including the Federal Reserve and the Bank of England, are worried that inflation could become entrenched. In the euro area, however, the greater likelihood is perhaps that, once disruptions from the pandemic fade, it still undershoots the ECB’s 2% target.To see this, consider the differences between economic conditions in the euro zone and America. There is less evidence of booming demand in Europe. Output is still slightly below its pre-covid level, whereas it is well above it in America. Fiscal stimulus in the euro area has been less generous.Meanwhile, one-off disruptions seem to have played a bigger role in Europe. About half the inflation rate in November reflected surges in food and energy prices, which are unlikely to last. Other pandemic-related factors, including a temporary value-added-tax cut in Germany last year, have also played havoc with the base used to calculate annual inflation. Strip these out, by comparing “core” prices today with those in 2019, and annualised inflation falls below 1.5%, said Fabio Panetta, a member of the ECB’s council, in November. (The measure exceeds 3% in America.)Hawkish types would argue that even temporary disruptions could generate “second round” effects, by becoming embedded in wage demands. But a strong pickup in wage growth is yet to materialise, and measures of inflation expectations are, on average, just below 2%. After its year-long strategy review concluded in the summer, the ECB promised to raise interest rates only if it expected inflation to reach 2% in the coming one to two years and stay there. Those criteria do not seem to have been convincingly met.What about the need for QE? The Bank of England is soon due to stop making new bond purchases; Jerome Powell, the head of the Fed, has said that he will start to taper purchases more quickly. But in the euro area the answer is muddy precisely because the inflation picture is different. Some on the ECB’s council, including Isabel Schnabel, point out that the unwanted side effects of asset purchases are rising, and the gains are diminishing. The ECB will therefore be better off providing guidance on its interest rates to steer markets. One undesirable consequence of QE could be that central banks are now big players in government-bond markets: the ECB holds more than 40% of outstanding German and Dutch sovereign bonds, according to estimates by Danske Bank.The expiry in March of one of the ECB’s bond-buying schemes, which was intended to counter the financial-market effects of the pandemic, could provide an opportunity for the ECB to stop expanding its footprint in bond markets. But not everyone agrees on the need to scale back asset purchases. Many economists expect the ECB instead to top up another existing asset-purchase programme in the coming months, so as to ensure that bond-buying does not tail off too rapidly. Mr Panetta has worried that too sharp a reduction in asset purchases could lead to a “premature increase in long-term interest rates”. In other words, if the ECB’s ultimate problem is that inflation is too low, rather than too high, then it may not have the luxury of doing away with QE. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Emergency exit” More

AS BIRTH ANNOUNCEMENTS go, it was momentous. On November 24th India’s government declared that the country’s fertility rate had dropped to 2.0 children per woman. That is below the replacement rate—at which new births are sufficient to maintain a steady population—and puts India in the company of many richer economies. Indeed, fertility rates are now below replacement level in all four “ BRIC” countries (Brazil, Russia, India and China), with the population probably falling in Russia and China. It is no surprise that emerging economies should follow a demographic trajectory similar to that travelled by rich economies before them. But the pace of change seems to be accelerating, with potentially profound implications for the global economy.What social scientists refer to as the “demographic transition” has long been an essential feature of economic modernisation. In pre-industrial societies both birth and death rates (annual births and deaths per 1,000 people) were very high, and overall population growth was uneven and slow. But in the 18th century, death rates in parts of north-west Europe began to decline, marking the first stage of a seismic demographic shift. Falling death rates led to rapid population growth; Britain’s population roughly doubled between 1760 and 1830. Yet from the late 18th century, fertility rates began to decline as well. By the 20th century, birth and death rates in rich countries stabilised at low levels, leading to slow or even negative population growth in the absence of immigration.Transitions are complex social phenomena. Falling death rates are easiest to explain, as the product of improved nutrition, medicine and public health. Falling birth rates are in part a response to economic incentives. As the return to skill increases, for example, families seem to have fewer children in order to invest more in each child’s education. But culture matters, too. In a recent paper, Enrico Spolaore of Tufts University and Romain Wacziarg of the University of California, Los Angeles, note that in Europe, new fertility norms first emerged in France in the late 18th and early 19th century. The fashion for fewer births was probably rooted both in changes in outlook associated with secularism and the Enlightenment and in the spread of information about family planning. As birth rates fell across Europe, they did so faster and earlier in places with linguistic and cultural ties to France.Demographic transitions today follow fairly similar patterns, reckon Matthew Delventhal of Claremont McKenna College, Jesús Fernández-Villaverde of the University of Pennsylvania and Nezih Guner of the Universitat Autònoma de Barcelona, in another new paper. The authors gather data on 186 countries, and find that all but 11 have experienced the transition to lower, more stable death rates that are well below pre-industrial norms. A bevy of about 70 countries began their transition towards low fertility rates between 1960 and 1990. Only one country—Chad—has yet to begin a fertility transition. (In 80 countries, both mortality and fertility shifts towards modern lows are now complete.)Importantly, the pace at which countries undergo a demographic transition seems to have sped up. While Britain’s transition unfolded in a leisurely fashion between the 1790s and the 1950s, Chile’s occurred more briskly between the 1920s and the 1970s, and those begun towards the end of the 20th century have taken only a few decades. This acceleration seems at least partly to reflect what the authors call “demographic contagion”, or the fact that transitions occur sooner and faster where geographically and culturally proximate places have already undergone a fertility shift. This proximity effect may also mean transitions now start at lower income levels. Whereas fertility transitions over the past two centuries tended to begin at GDP per person of about $2,700 (on a purchasing-power-parity basis and in 2011 prices), those begun since 1990 occurred at an income level of around $1,500.The upshot of this rush into the demographic transition is a steady drop in global fertility and population growth. The world’s fertility rate, which stood at 3.5 births per woman in the mid-1980s, fell to just 2.4 in 2019. Indeed it is possible, given observed declines in rich-world births during the pandemic, that covid-19 may have pushed the world as a whole within sight of a replacement-level fertility rate, if only temporarily. The world’s population will continue to grow even after that level is attained, because of the large number of people either at or approaching child-rearing age. India’s population, for example, is still expected to rise to about 1.6bn by mid-century. But that is a lower peak (by about 100m people) reached sooner (by about a decade) than previously expected. Similarly, the rapid decline in global fertility may mean that projections by the UN, which show the global population rising towards 11bn by 2100, will ultimately have to be revised downwards.Old moneyThe global completion of the demographic transition will not be without its headaches. It may complicate long-run macroeconomic problems, for example, or so suggests recent work by Adrien Auclert and Frédéric Martenet of Stanford University, Hannes Malmberg of the University of Minnesota and Matthew Rognlie of Northwestern University. They note that increased saving by ageing populations depresses inflation and interest rates. As the share of world population over 50 rises from 25% today to 40% in 2100, low interest rates may become more entrenched, returns on assets could drop and global imbalances widen.Yet demographic transitions could also bring a range of economic benefits. Slower population growth could make the challenge of cutting carbon emissions less daunting. And the potential of the fewer workers around might be better realised, through better education and more women participating in the labour force. The arrival of immigrants, once viewed as a threat, could even become as momentous an occasion as a birth in the family. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “Family matters” More