Introducing

Andrew Cates

Andy Cates joined Haver Analytics as a Senior Economist in 2020. Andy has more than 25 years of experience forecasting the global economic outlook and in assessing the implications for policy settings and financial markets. He has held various senior positions in London in a number of Investment Banks including as Head of Developed Markets Economics at Nomura and as Chief Eurozone Economist at RBS. These followed a spell of 21 years as Senior International Economist at UBS, 5 of which were spent in Singapore. Prior to his time in financial services Andy was a UK economist at HM Treasury in London holding positions in the domestic forecasting and macroeconomic modelling units. He has a BA in Economics from the University of York and an MSc in Economics and Econometrics from the University of Southampton.

Publications by Andrew Cates

Global| Oct 27 2026
Why Central Banks Should Tread Carefully
The Federal Reserve, Bank of Canada, European Central Bank and Bank of Japan meet this week against a difficult backdrop. An energy shock has pushed inflation higher just as households and businesses are contending with expensive borrowing. Economic growth has proved resilient, but the question for policymakers is how secure that resilience really is. There is a strong case for caution before tightening monetary policy further.

The immediate dilemma is familiar. Central banks cannot prevent an oil price shock, but they must guard against its spreading into wages, other prices and inflation expectations. At the same time, higher energy bills reduce spending power and raise costs for businesses. Further increases in interest rates could compound that pressure, even as the effects of earlier tightening are still being felt.

For now, there is little evidence that higher energy prices are feeding into broader inflation. The foundations of demand also deserve closer scrutiny. Government borrowing, rising asset values and investment based on expectations of future returns have all supported spending. Those supports may be less durable than the headline growth figures suggest.

The danger is that policymakers mistake this spending for lasting economic strength. Until productivity gains translate into broader income growth, further tightening risks undermining both today’s demand and the revenues needed to justify tomorrow’s investment. That does not mean central banks should overlook persistent inflation. It does mean they should weigh the evidence for it against the fragility of the growth they are seeking to restrain.

The evidence on inflation Latest data for September show that core CPI inflation, which strips out food and energy, is 2.6 per cent in the United States, 2.5 per cent in the euro area and 2.4 per cent in Japan. None has moved materially higher over the past six months, and the American and Japanese measures are lower than a year ago. So far, the rise in headline US inflation to nearly 4 per cent has not been accompanied by a comparable increase in core inflation.
by:Andrew Cates
|in:Viewpoints
Global| Oct 22 2026
Charts of the Week: Growth on Borrowed Strength
The global economy has proved remarkably resilient in the face of war, political uncertainty and persistently high borrowing costs. Yet resilience is not the same as strength. Growth has become increasingly dependent on a narrow investment boom, particularly in artificial intelligence, while its financial and physical costs are mounting. Last week's market retreat exposed the concentration of investor enthusiasm (chart 1), while Japanese exports revealed the growing importance of semiconductor investment to global industry (chart 2). Elsewhere, the picture is less reassuring. British wage disinflation appears to be stalling (chart 3), housing markets remain subdued (chart 4), and China's investment weakness has spread well beyond property (chart 5). Meanwhile, rising electricity prices point to another constraint on growth (chart 6). The underlying question is whether the investment sustaining the expansion can deliver sufficient productivity gains to justify its rising costs.

by:Andrew Cates
|in:Economy in Brief
Global| Oct 20 2026
AI’s Costs Are Arriving Before Its Benefits
The AI boom faces a problem beyond the technology itself: its prospective customers must be able to afford it. Investment in computing capacity is adding to demand for power, equipment and capital before comparable productivity gains have spread across the economy. If those pressures weaken customers’ spending power, they may also constrain the revenues needed to justify the build-out. AI can fulfil its technical promise while disappointing those who finance it.

This helps explain why weakness outside technology should concern technology investors. The immediate beneficiaries of infrastructure spending are easy to identify. The eventual returns depend on a much broader group of businesses earning enough from AI to pay for its services. Those two stages need not proceed at the same pace.

The costs arrive first Every investment boom creates demand before it creates productive capacity. For AI, the timing matters because several essential inputs are slow to expand. Power stations, grid connections and transformers take years to deliver. A well-funded buyer can secure priority without increasing what is immediately available to everyone else.

Electricity makes the constraint tangible. Data centres add demand to networks already serving competing needs. Fuel prices, weather and available generating capacity also matter, so rising power costs cannot simply be attributed to AI. Nevertheless, the build-out can intensify local shortages. For other users, the consequences include higher operating expenses and delays to investment, even if they have yet to adopt the technology.
by:Andrew Cates
|in:Viewpoints
Global| Oct 15 2026
Charts of the Week: The Narrow Boom
The past week saw investors begin to question the AI optimism that has sustained equity markets all year. Asian technology stocks fell sharply, the Nasdaq retreated to its weakest level this month, and government bonds attracted a defensive bid. The reappraisal arguably concerned positioning in the artificial-intelligence complex rather than the macroeconomic backdrop, which, if anything, improved. The October Blue Chip survey delivered growth upgrades across almost the entire panel alongside lower inflation forecasts for this year (chart 1), a combination consistent with an improvement in supply. The same US forecasters, however, made only modest changes to their view of the coming five years (chart 2). Chinese customs figures for September highlighted the growing importance of chips: exports rose 36.3 per cent on the year and the monthly surplus reached 133.5 billion dollars, with semiconductors furnishing close to a quarter of the increase (chart 4). For the European Union, the bilateral deficit with China has widened by more than $60 billion in 12 months (chart 5). Yet the composition of American construction spending (chart 3) and the uses to which European firms actually put AI technology (chart 6) suggest an expansion narrower than the headline figures imply.

by:Andrew Cates
|in:Economy in Brief
Global| Oct 08 2026
Charts of the Week: The Political Premium
Equity markets in the United States pushed to fresh highs again this week, with implied volatility close to the lows of the year, the dollar firmer than it was a month ago and gold some way below its late-August peak. Capital is being pulled towards American investment rather than away from risk. The economic news beneath that is less comfortable. US hiring has slowed a long way, though the number of jobs needed to keep unemployment from rising has fallen with it, which leaves the American labour market cooler without being as weak as the headline numbers suggest (chart 1). Europe has offered no such ambiguity. French borrowing costs have moved above Italy's relative to Germany as a minority government struggles to assemble support for a budget, with a snap election in prospect in Spain and the German coalition under growing pressure from the right (chart 2). The deeper difficulty is that political stability across the advanced economies has eroded roughly in step with the growth of output per person since 2019, which makes the familiar division between a solid core and a fragile periphery harder to sustain (chart 3). Bond markets have repriced almost everywhere this year, but for different reasons: the American move has been almost entirely real, while in Europe a larger share reflects compensation for expected inflation (chart 4). Much of that compensation is geopolitical in origin, with oil back towards the upper end of its range, defence and energy security absorbing more public money, and trade being rearranged on strategic rather than commercial grounds (chart 5). The expansion that results is respectable but narrow, resting on one economy and, within it, on a single investment boom (chart 6).

by:Andrew Cates
|in:Economy in Brief
Europe| Oct 07 2026
Europe’s Growth Problem Is Also a Political Problem
Weak growth and divided governments complicate fiscal repair and the investment needed to improve productivity.

Europe is caught in a difficult circle. Weak growth is undermining confidence in governments, while political fragmentation makes it harder to agree on the reforms and budgets that might restore it. Higher debt-servicing costs leave less room to reconcile competing demands. Economic disappointment and political division risk reinforcing one another, limiting the ability to strengthen growth.

There is no painless way out. Spending cuts can depress activity and alienate voters, while further borrowing may add to the debt without improving the capacity to service it. Higher productivity offers a more promising escape: AI could raise incomes and tax revenues enough to ease the burden. But the investment needed to secure those gains competes for capital and energy, potentially raising Europe’s costs well before it raises European incomes.

That delay matters for monetary policy. Further ECB tightening might restrain inflation, yet also weaken investment and demand in economies struggling to grow. Europe must therefore improve its capacity to invest and govern while managing the immediate pressures on household incomes and public finances.

The difficulty of governing France illustrates the problem. Its minority government is struggling to secure support for a budget intended to curb the deficit. In Spain, a parliamentary defeat over measures to ease the housing crisis has prompted a snap election. In Germany, regional gains by the far-right AfD are putting the governing coalition under pressure. Different economic circumstances have produced a common difficulty: assembling durable support for difficult choices.

Those choices are becoming more expensive. Voters want better services and relief from living costs, while defence and energy security require greater spending. At the same time, governments must refinance debt issued when interest rates were much lower. Rising interest bills leave less room to satisfy these demands, making political agreement harder just as the cost of failing to reach it increases.

Weak growth weakens consent The roots of this difficulty extend well beyond the latest political disputes. The World Bank’s political-stability measure shows a broad deterioration across advanced economies over the past decade. Germany has suffered a particularly marked decline, whereas Greece and Italy have improved or held their ground after earlier periods of upheaval.
by:Andrew Cates
|in:Viewpoints
Global| Oct 01 2026
Charts of the Week: A Benign Phase
Long-dated US Treasury yields climbed again this week to levels last seen before the financial crisis. Crude oil prices in the meantime eased into the quarter-end as Middle Eastern exports recovered, though Brent will still likely close September higher than it began, and equity markets have absorbed the move in bonds without much difficulty. Forecasters have followed these market moves rather than resisted them. The latest Blue Chip Financial Forecasts survey suggest that policy rates are now expected to be higher in twelve months' time in every major economy, with Japan moving furthest and the United Kingdom least (chart 1). The difficulty is that this repricing is taking place against a world economy that is arguably performing better than a tightening cycle would ordinarily permit. Demand for artificial-intelligence skills is rising in labour markets well beyond the United States (chart 2), world industrial output has accelerated even as core inflation across the G7 has fallen (chart 3), and capital goods orders across the G3 have turned decisively higher (chart 4). Wage growth has slowed in three very different labour markets of late without the increase in unemployment that earlier disinflations demanded (chart 5). Such a combination is rare, and it rests on conditions that may not hold. The constraint that eventually binds could be more physical than monetary, and it is already apparent in the cost of electricity in the regions where the data centres are being built (chart 6).

by:Andrew Cates
|in:Economy in Brief
Global| Sep 30 2026
AI Productivity and Capacity Constraints
Artificial intelligence can lift productivity and sustain business investment. The scale and durability of the gains will depend on labour, energy, materials, finance and the policy response.

Introduction and summary messages The surge in artificial-intelligence investment is being driven by the technology's potential to raise productivity and corporate profitability. It is unfolding, however, in a world economy increasingly constrained by scarce labour, power, materials and capital. Those constraints make labour-saving technology more valuable, but they also limit how quickly the infrastructure supporting it can expand.

The initial macroeconomic effects can be favourable. If productivity rises faster than wages, unit labour costs fall. Firms can expand output without increasing employment at the same rate, supporting margins while containing underlying inflation. Stronger supply can therefore coexist with resilient demand and give monetary policy more room to accommodate growth.

The central risk comes later. Capacity and scarcity determine whether that favourable chain continues or reverses. Productivity gains can be diluted if electricity, grids, equipment, industrial materials or skilled labour become binding constraints. Inflation may then rise even before demand has weakened, leaving central banks to balance price stability against the investment needed to expand supply.

Backdrop Companies are buying computing power, software and equipment because they expect to produce more with fewer workers. Scarcity adds urgency to that calculation. Labour is expensive, trade is more fragmented and capital is no longer free. Governments are also investing in energy security, defence and domestic supply chains. Climate disruption and tighter immigration policies in some economies are adding to the pressure on energy systems, transport, construction and skilled labour.

Energy is where the tension is sharpest. Digital capital can be installed quickly; power stations, transmission lines and mines cannot. The most important price in the AI boom may therefore be the price of electricity rather than the price of a semiconductor.

The investment response is already visible. Orders for capital goods across the United States, Germany and Japan have risen for seventeen consecutive months, while Asian semiconductor exports tell the same story from the production side. Inflation-adjusted orders remain below their 2021 average, suggesting that the cycle is still relatively young.

The increase in investment is only the starting point. Its economic significance will depend on whether it produces measurable gains in output and productivity, how those gains are divided between labour and capital, and whether the expansion runs into physical or financial constraints. The framework below traces that transmission before the subsequent section considers what the available evidence suggests about how far it has progressed.
by:Andrew Cates
|in:Viewpoints
Global| Sep 24 2026
Charts of the Week: Narrow Shoulders
Financial markets have spent this week weighing whether this year's energy shock has passed its peak, and have changed their minds more than once. Brent slipped below $99 as Hormuz shipments were reported recovering and Gulf leaders gathered in New York, only to recover above $100 within a day. The relief in the energy market has proved neither durable nor shared by the bond market. The Federal Reserve raised rates last week for the first time in three years, the ECB has tightened alongside it and the Bank of Japan has moved again, leaving ten-year Treasury yields at levels last seen in 2007 and Bunds at seventeen-year highs. This week’s flash purchasing managers’ surveys help explain the discomfort, with European supply chains lengthening once more as dry bulk freight rates climb (chart 1). The aggregate global growth picture has nonetheless held up better than the geopolitics would imply, though the latest Blue Chip consensus survey continues to suggest that this resilience is concentrated in only a small group of semiconductor exporters rather than shared across the world economy (chart 2). Part of the explanation for the wider containment lies in the oil balance, where a drawdown in stocks without precedent in the available record has substituted for the spare capacity that once cushioned disruptions of this kind (chart 3), and part lies in the character of the commodity shock itself, which now has at least three unrelated sources (chart 4). Labour markets are where the strain has begun to show, and it is showing very unevenly across the advanced economies (chart 5). In European bond markets, meanwhile, the consequences have turned political, with the premium demanded on French debt over German reaching levels not seen since the euro crisis (chart 6).

by:Andrew Cates
|in:Economy in Brief
Global| Sep 22 2026
Oil: Running Out of Slack
Brent crude traded near $70 a barrel when the Strait of Hormuz closed at the end of February. It reached $138 in April and has since retraced part of that move while remaining well above its pre-disruption level. The macroeconomic response has so far been modest. Consensus forecasts for world output in 2026 have been revised down, but only very modestly.

The natural interpretation is that the structural sensitivity of output to energy prices has fallen, through lower energy intensity, more flexible product and labour markets, and better-anchored inflation expectations. There is something in each of these. But the evidence points to a more contingent explanation. The adjustment has been accommodated principally on the inventory margin rather than through quantity rationing or demand destruction, and the capacity to continue accommodating it that way is close to exhausted.

Implied global stock changes, derived from the EIA's world supply-demand balance, show a cumulative six-month drawdown roughly half as large again as the previous maximum in 2007. The initial condition matters here. Stocks were being accumulated rapidly through late 2025, so the disruption arrived with storage unusually full; the buffer was the incidental product of a preceding surplus rather than the result of deliberate precautionary accumulation. Commercial cover across the OECD has since fallen to around twenty-one days, and non-OECD buyers have begun to draw down the precautionary holdings built in the spring.
by:Andrew Cates
|in:Viewpoints
Global| Sep 17 2026
Charts of the Week: The Price of Money
The cost of energy and the cost of money set the tone this week. Brent crude held above $100 a barrel with a major Saudi pipeline still offline, and the Federal Reserve raised the federal funds rate by a quarter point, its first increase since 2023. The projections accompanying the decision mattered more than the decision itself, and futures have since priced a policy rate by the middle of 2027 above anything the committee has pencilled in, with the ten-year Treasury yield through 5 per cent for the first time since 2007 (chart 1). But the source of that tightening is worth dwelling on, because American companies are not competing for credit. The non-financial corporate sector is generating more cash than it spends, and has been for most of the past four years (chart 2). Forecasters have meanwhile spent the summer nudging growth forecasts up and inflation forecasts down for this year, with Taiwan and Korea marked up by some distance the most (chart 3). Britain provided a counterpoint, with pay growth and vacancies both back at or below pre-pandemic norms ahead of the Bank of England’s decision (chart 4). China’s August figures showed industrial output accelerating while investment contracted more deeply (chart 5). And Korean customs data for the first ten days of September gave yet another reading of how much of world trade now runs through a single product (chart 6).

by:Andrew Cates
|in:Economy in Brief
Global| Sep 10 2026
Charts of the Week: The Reflationary Turn
Financial markets have entered September in an awkward mood. Global equities have advanced, but long-term bond yields have risen towards multi-decade highs as the European Central Bank meets this week and the Federal Reserve and Bank of Japan prepare to follow. The common thread is a turn towards reflation: growth is firming while inflation remains stubborn. Growth surprises have improved relative to inflation surprises, supporting equities (chart 1), while policy uncertainty has retreated from its peak but remains unusually high (chart 2). Most major economies are now on the expansionary side of the growth-inflation cycle (chart 3). Yet supply-chain pressure is returning (chart 4), inflation has become more responsive to tight labour markets since 2020 (chart 5), and the rise in bond yields has been driven largely by higher real rates rather than inflation expectations (chart 6).

by:Andrew Cates
|in:Economy in Brief