Haver’s data services are provided through the DLX platform; delivering tools for data management, visualization, modeling and publishing. DLX is designed to increase productivity and integrates with Excel, PowerPoint, and major statistical software packages; MatLab, R, Python, SAS, E-views and Stata. DLX component application DLXVG3 offers precision graphics, publishing, analytic tools, and easy navigation for all Haver databases.

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Chart and compare multiple data series with accompanying data table of values

Advanced functions (growth rates, moving averages, aggregation, seasonal adjustment)

Analytical tools (cycle charts, scatterplots, trend lines, and recession shading)

Complete graph customization (axis scaling, sizing, formatting, styles)

Excel and PowerPoint direct export and complete integration (dynamic spreadsheets and presentations update on a click)

DLXVG3

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DLX Add-ins for all versions of Excel provide instant data updates of entire workbooks

Use DLXVG3 to locate data series codes from within any file, easily creating new spreadsheets for analysis

Edit date ranges, archive data, apply functions

Excel Spreadsheet Add-ins

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Haver offers timely, accurate, and professionally supported data via an update service, meeting the strictest demands of the institutional research community

AutoUpdate provides fast and reliable data updates within seconds of source releases

Timer service runs continuously on an hourly basis when DLX is running

Manual updates offer clients the independence to update data retrievals on any desired schedule

All database updates retrieve only the data series that have changed and send only the data points that have been updated; including revisions

Timely Updates

DLX software tools to convert data into many different formats needed for diverse analytical frameworks

Haver supports a DLX API permitting clients to leverage and build processes with DLX data

Database Compatibility

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Data Link Express

Platform Independent site delivering DLX Databases across any workstation or device.

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HaverView

[Matlab](http://matlab.com) by The MathWorks lets you access, visualize, and analyze historic time-series data to identify patterns or uncover complex relationships. From within a single environment you can:

- Access data from multiple sources including files, spreadsheets, databases, data providers, and the Web
- Store data in financial time-series objects to simplify data management, data transformation, missing-data handling, and date-math calculations
- Perform technical analysis with moving averages, oscillators, stochastics, and indices
- Create custom analysis routines and visualizations or animations to capture, present, and share your analysis processes and discoveries
- Customize your analysis environment with advanced functionality from signal processing, statistics, or econometrics

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MATLAB

[Stata Data Analysis and Statistical Software](https://www.stata.com) by StataCorp LP is an integrated statistical package designed for researchers of all disciplines. It provides the ability to do data analysis, data management and graphics and has features such as multiple imputation, factor variables, GMM, competing-risks regression, state-space modeling, predictive margins, and more.

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Stata

[SAS](https://www.sas.com) provides an integrated environment for predictive and descriptive modeling, data mining, text analytics, forecasting, optimization, simulation, experimental design and more. From predictive analytics to model deployment and process optimization, SAS provides a range of techniques and processes for the collection, classification, analysis and interpretation of data to reveal patterns, anomalies, key variables and relationships, leading ultimately to new insights and better answers faster.

[SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) is a seamless interface between Haver and SAS data processing that enables SAS users to read economic and financial time series data that reside in a Haver Analytics DLX (Data Link Express) database. [SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) requires both SAS/ETS and Base SAS Software.

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[RATS (Regression Analysis of Time Series) Econometric Software](https://estima.com) by Estima is a leading econometrics and time-series analysis software package. It provides ability to do linear and non-linear least squares, forecasting, SUR and ARIMA models and in addition, supports advanced techniques such as GMM, ARCH and GARCH models, state space models, and more.

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RATS

Session 1: Bootcamp Part 1

Visualization with GGPlot2 and data analysis

Session 2: Bootcamp Part 2

Session 3: Univariate Models Part 1

Session 4: Univariate Models Part 2

Session 5: Vector Autoregressions

Session 6: Cointegration and error-correction models

A popular open source option for statistical computing and graphics that is available on many UNIX platforms, Windows and MacOS

Estimating, evaluating, and forecasting ARIMA models

Understanding the concept of non-stationarity and testing for unit roots

Estimating autoregressions, granger causality tests, and impulse response functions

Understanding the concept of cointegration and testing using the Enger-Granger test

Estimating and forecasting with vector error correction models

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Teaches econometrics and forecasting at the University of Colorado Denver. He has over 15 years of econometric experience in both the private and public sector.

Daniel L. Jerrett, Ph.D.

Abdel M. Zellou, Ph.D.

Bootcamp and Econometric Tools 1 & 2

Econometrics Training: Applied Time Series in R

Session 5: Multivariate Models Part 1

Session 6: Multivariate Models Part 2

Haver partners with SmartMacro Labs to offer a two week immersive online course introducing participants to the power of the Python programming language. This applied hands-on training develops statistical economics skills with a concentration on economics and finance.

Gain proficiency in building modern time-series models in Python through real-world applications. Designed for professionals in both the public and private sector, the course does not require prior experience, assuming only that participants have a basic understanding of regression and statistical concepts.

Proficiency working in Jupyter notebooks and the Python environment

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Remote Training: Applied Time Series in Python

Tom Moeller

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Nonfarm payrolls increased 119,000 in September after falling 4,000 in August, revised from a 22,000 increase and rising 72,000 during July, revised from 79,000. Expectations had been for a 45,000 rise in the Action Economics Forecast Survey. The three-month average change in payrolls of 62,000 compared to 18,000 in August, but stood far below its high of 232,000 in January.

Average hourly earnings rose 0.2% in September after increasing 0.4% in August, revised from 0.3% and an unrevised 0.3% in July. Earnings growth of 3.8% y/y equals that in August. It has been trending lower from its 5.9% high in March 2022.

The unemployment rate, measured in the household survey, edged up to 4.4% from 4.3% in August and 4.2% in July. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 8.0% after rising to 8.1% in August. It was 6.6% in April 2023.

In the **establishment survey**, private-sector employment in September increased 97,000 after rising 18,000 in August. Construction sector employment strengthened 19,000 after falling for three consecutive months. Elsewhere employment fell. Factory sector jobs declined 6,000, off for the fifth straight month. Durable goods employment weakened 4,000 in September following a 21,000 decline. Nondurables employment fell 2,000 after a 6,000 August increase. The number of mining & logging industry jobs declined 3,000, the fifth consecutive monthly shortfall.



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Private service-sector employment increased 87,000 during September after improving 50,000 in August. Employment increases occurred in just three service-sector categories. Private education & health sector employment rose 59,000 in September, following a 43,000 August increase. The number of leisure & hospitality jobs rose 47,000 after a 32,000 gain while financial activities employment improved 5,000 after falling 15,000 in August. Elsewhere, employment was weak. The number of professional & business services jobs fell 20,000, down for the fifth straight month as temporary help employment declined 15,900, also off for the fifth month in a row. Trade, transportation & utilities employment eased 2,000, off for the seventh consecutive month. Information services employment held steady after falling for three consecutive months. 

Offsetting some of this weakness, government sector payrolls rose 22,000 in September and reversed the 22,000 August drop. State government payrolls increased 16,000 after falling in each of the prior four months. Local government hiring rose 9,000 following a 14,000 August increase. Continuing to decline, federal government employment weakened 3,000 in September and has fallen in all but one month this year. 

Private-sector average hourly earnings improved 0.2% (3.8% y/y) in September after rising 0.4% in August, revised from 0.3%. Earnings in the goods-producing sector increased 0.3% in September after two straight 0.4% gains, although the 4.0% y/y increase is below the 5.4% high early last year. In construction, earnings rose 0.3% (3.8% y/y) following a 0.6% rise, while factory sector earnings improved 0.4% (4.2% y/y) after a 0.2% gain. In the private service sector, earnings rose 0.2% (3.8% y/y) in September after a 0.4% gain. Information earnings improved 0.3% (5.2% y/y) after rising 0.7% in August. Professional & business services pay increased 0.3% (4.8% y/y) after four straight months of 0.5% increase while leisure & hospitality earnings rose 0.3% (3.7% y/y) after rising 0.4%. Private education & health services earnings eased 0.2% (+2.5% y/y) following a 0.1% gain. 

The length of the average workweek held at 34.2 hours in September after falling from 34.3 hours in July. The workweek in the goods-producing sector fell to 39.7 hours from 39.8 hours in August. The construction sector average workweek was 39.0 hours for the third straight month while the factory sector workweek eased to 39.9 hours, the weakest since October of last year. The average workweek in the private service sector was 33.2 hours for the third straight month. Information sector hours surged to 37.5, the most in five years. Financial activities hours held at 37.6. Private education & health services hours steadied at 32.7 in August.



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In the **household survey**, the unemployment rate increased to 4.4% in September after rising to 4.3% in August from 4.2% in July. A 251,000 rise in employment lagged the 288,000 August gain. Labor force growth picked up to 470,000 in September from 436,000 in August. It was the highest jobless rate since October 2021, up from a 3.4% low in April 2023. 

The labor force participation rate rose to 62.4% in September from 62.3%, remaining well below the high of 63.3% early in 2020. The rate for teenagers jumped to 36.3%, a five-month high. For workers aged 20-24, the rate rose to 71.1% after plunging to a four-year low of 70.2%. For workers aged 25-54, the participation rate held at 83.7% after increasing from 83.4% in July. For individuals 55 and over, the rate held steady at 38.1% but remained near a 20-year low of 38.0% in June.

The employment/population ratio for all workers edged up to 59.7% in September. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic. For men, the rate slipped to 64.8% from 65.0% in August and for women, the rate increased to 54.8% after slipping to 54.5% in July.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.



- Hiring improves broadly.
- Construction, private services & government jobs rise, but factory employment declines.
- Earnings improvement is steady y/y, but slows m/m.
- Unemployment rate moves higher as job growth lags labor force gain.


U.S. Payroll Employment is Unexpectedly Firm in September; Earnings Rise Steadily, but Jobless Rate Edges Up

Michael J. Moran

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Sales of existing homes rose 1.2% in October, marking the third increase in the past four months and leaving a net gain of 4.3% over this span. Although activity has advanced in the past few months, sales remain low by historical standards. They dramatically trail the robust activity that unfolded in response to the low interest rate environment during the pandemic, and they lag noticeably behind the level of sales before Covid.

Interest rates seem to explain both the recent mild stirring in home sales and the still-low level of activity relative to historic norms. An easing in mortgage rates from approximately 7% in the early months of the year to 6.25% more recently undoubtedly gave a boost to the housing market. However, mortgage rates are still approximately 1.4 percentage points above the high in 2018 and almost 2.6 percentage points above the low in 2019, easily enough to keep many potential homebuyers on the sidelines.

The National Association of Realtors, the source of data on existing home sales, cited a lack of inventory for the slow pace of sales when activity started to soften in 2022. That seems to be less of a problem now. The number of homes on the market has recently climbed to slightly more than 1.5 million, up from a range of 0.85 to 1.3 million from 2021 through much of 2024. When measured relative to the pace of sales (so-called months’ supply) the current level of 4.5 months is comfortable by historical standards. (Months’ supply is the time required to clear housing inventory at the current sales pace.)

The subdued pace of demand has led to cooling in price appreciation. The median price of existing homes is still increasing, but at a slow pace. The latest year-over-year increase of 2.9% pales in comparison to the double-digit increases seen during the low interest rate environment of 2020-22 and trails the increase of 4.5% last year and the average of 4.7% in 2018-19.



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-Sales rose for the third time in the past four months…
-…but activity remains low by historical standards


Existing Home Sales: A (Faint) Pulse

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After a seven-week hiatus because of the government shutdown, the Department of Labor this week resumed the publication of data on claims for unemployment insurance. The newly available figures for initial claims showed essentially no change in the comfortable underlying trend. Continued claims (i.e. the number of individuals receiving unemployment benefits) took a small step higher and added to an upward drift that began in the spring. Although continued claims have drifted higher, they are not at an alarming level relative to historical standards.

Initial claims totaled 220,000 in the week ended November 15, a reading that is comfortably within the range of the past three years and low by historical norms. Indeed, the latest reading and the average of 228,000 for the year to date is close to the pre-pandemic average of 219,000 in 2018 and 2019, when the labor market was viewed as strong. The range of observations from this year might strike some observers as wide, but initial claims carry a strong random element, and fluctuation this year were within the normal range of volatility. The standard deviation so far this year has totaled 11, essentially identical to results in 2018 and 2019 and a bit lighter than the average in the prior two years.

Steady trends in initial claims seem out of step with announcements of layoffs by major corporations in recent weeks and with slow net job growth in recent months (average payroll growth of 39,000 in the past five months). Announced layoffs by corporations often are implemented gradually, and thus the layoffs would affect claims with a lag. Soft payroll figures are perhaps reflective of cautious hiring by businesses rather than a jump in separations.

A reluctance to hire is evident in the upward drift in continued claims for unemployment insurance. The strong recovery after the pandemic pushed this measure to the low end of its historical range in 2022. The increase in 2023 and 2024 was not especially troubling, as the number of individuals receiving unemployment benefits was still comfortable by historical standards. The upward drift since the spring could be viewed as a shift in the tone of the labor market, but the rate of change and the level are not suggestive of marked weakening. The latest reading of 1.974 million exceeds the average of 1.718 during the strong labor market of 2018-19, but it is still in the low end of the historical range and far below results seen during recessions. The measure has reached levels of approximately 4.0 million in most past recessions and it exceeded 6.5 million in the depth of the Great Recession in 2009.


- Initial claims remain range bound at a low level
- Continued clams are drifting upward


Unemployment Claims: Modest Changes

Robert Brusca

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The survey of the industrial sector by the Confederation of British Industry (CBI) shows ongoing weakness for orders and export orders as stocks build slightly more aggressively. The build out in stocks when orders and expectations for volume are falling is not a good sign and suggests that the inventory buildup may be involuntary and that may be setting the stage for weaker economic performance ahead.

Total orders in November notch a reading of -37 on the net diffusion reading, about the same as the -38 logged in October. Both of those are significantly weaker than September's -27 and compare to a six-month and 12-month average around minus 32 and minus 33.

Export orders are improved in November but still quite weak at a reading of -31 compared to -46 in October. At -31 the November net reading for exports is similar to the six- and 12-month averages which are -32 and -33, respectively.

Stocks of finished goods in November have moved up to +16 from +7 in October they were higher than the 12-month average and the higher than the six-and 12-month averages, the latter 2 hovering around values of 10 and 12 compared to this month's value of 16.

An accelerating weakening appears, looking ahead for output volume over the next three months. The reading drops to -30 in November from -19 in October and -14 in September;  the 12-month average stands at -13 with the six-month average of -15. This is a severe deterioration

Average prices over the next three months, however, as expected output volume deteriorates sharply in November is expected to see less pressure.  The November value for prices in 3-months at a reading of +7 compares to score if +16 in October. At +7 the price expectations are well below the 12-month average which has been 18 and the six-month average which checks in at +13.  With economic cooling expected, cooling in price pressures are expected to accompany that slow down.

Standings by the numbers: The queue standings of the November variables are uniformly weak. The exception is stocks of finished goods which have a 74-percentile standing displaying strength in that measure while orders and expected output volume are weak as a bad sign.  Average prices, while losing some momentum in November, still have a standing at their 53.7 percentile, slightly above their median-  so these are still somewhat heated price readings although the pressure is off compared to October and compared to 6-month and 12-month standards.  Total orders have a 9-percentile standing; export orders have a 26-percentile standing and the expectation for output volume over the next three months has only a 2.8 percentile standing.  

The activity and expected activity portions of the survey remain very weak. Their results support the idea that the economy may need more help from the Bank of England despite some ongoing inflation overshoot.  As mentioned in yesterday's write up the inflation metrics are beginning to converge toward values that the Bank of England will find more acceptable although the current levels of variables measuring inflation are still too high. The momentum is in the right direction and with economic weakness in train, it's hard to imagine the Bank of England holding the line or standing on ceremony because inflation is still above target.  The economy is beginning to emit signs that are a more significant outcry for help.


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United Kingdom

CBI Industrial Survey Seeing Ongoing Weakness and Deterioration Ahead

Andrew Cates

Tian Yong Woon

**AI’s Promised Land**
A major question hanging over 2026 is whether the rapid advances in AI will finally translate into visible, economy-wide productivity gains. That debate is already shaping expectations for the year ahead, and recent data offer some tentative encouragement. The surge in US business applications since the pandemic points to renewed entrepreneurial energy, and many US economists — according to our latest Blue Chip surveys of forecasters — are optimistic that AI will lift trend productivity over the coming years. Real output per hour (in the US non-financial corporate sector) has also begun to firm, suggesting that the initial experimentation phase may be giving way to deeper operational integration (chart 1). Still, history urges caution: past technology waves have shown that productivity gains tend to arrive unevenly and with a lag, as firms reconfigure processes, retrain workers and invest in complementary infrastructure. As we discuss further below constraints around power availability, computing capacity and labour supply could slow the pace of diffusion. Even so, the combination of rising business formation, improving productivity indicators and a more confident professional consensus does hint at a more dynamic US supply side. The key issue for 2026 will be how quickly these early gains spread beyond early adopters and begin to shift the macro narrative in a more durable way.

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**Financial Markets and the AI Narrative**
Following on from the productivity question, debate over a potential AI-driven equity market bubble will also be a defining theme for 2026, and the shifting expectations shown here help explain why investors are increasingly uneasy. Over the course of 2025, consensus forecasts for US profitability in 2026 have drifted higher, reinforcing the view that AI could deliver robust earnings gains across the corporate sector. At the same time, expectations for short-term interest rates have edged lower, supporting higher valuations through the discount-rate channel (chart 2). This combination—a rising profit narrative paired with falling rate expectations—is a powerful tailwind for equity multiples, and it has helped sustain the extraordinary outperformance of AI-linked firms. But it is also the kind of macro configuration that has historically amplified the risk of over-valuation, especially when the underlying technological transformation is still in its early and uneven adoption phase. The key question for next year is whether these profit expectations prove resilient as the real economy absorbs the costs of AI integration—energy constraints, capex demands, talent shortages and potential regulatory pushback. If earnings forecasts begin to slip or rate expectations turn, even modestly, the valuations built on the AI story may look increasingly stretched. For now, equity markets (until very recently) have been pricing an almost immaculate hand-off between falling rates and rising profits. Whether that balance holds will be central to how the AI narrative evolves in financial markets next year.

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**Monetary Policy Uncertainty**
Building on these valuation tensions, monetary-policy uncertainty is likely to play a larger role in shaping market dynamics in 2026, and while the picture in the US has turned more favourable, the global backdrop is more complicated. The steady decline in the Kansas City Fed’s policy-rate uncertainty index through 2025 has helped support the Nasdaq’s strong performance (chart 3) — a reminder of how sensitive AI-exposed, long-duration equities are to even small shifts in the expected rate path. The Fed’s growing responsiveness to softer labour-market signals provides an important stabiliser: with vacancies cooling, payroll growth slowing and wage pressures easing, the Fed can retain the flexibility to ease gradually and deliberately. But globally, the story is more mixed. Several major central banks — the ECB, BoE and RBA in particular — are nearing the end of their easing cycles, which means the “rate-tailwind” that has supported global risk assets may fade as 2026 progresses. Meanwhile, the Bank of Japan is leaning in the opposite direction as it continues to normalise policy, raising the prospect of tighter financial conditions and potential spillovers into global bond markets. This divergence could widen cross-country yield spreads, complicate capital flows and introduce a new layer of uncertainty for global tech valuations.

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**Fiscal Firepower or Fiscal Fatigue?**
As the policy backdrop shifts, another central issue for 2026 is whether major economies still have the fiscal firepower to support growth—or whether rising public‑debt burdens are finally ushering in an era of fiscal fatigue. Chart 4 below captures the dilemma clearly: G20 debt ratios have risen for over a decade and are set to climb further, while primary balances remain persistently in deficit. Fiscal policy is still doing much of the macroeconomic lifting. Country specifics sharpen the picture. In the US, the outlook hinges on the fate of the expiring tax cuts and whatever fiscal package follows—scenarios that could keep deficits wide regardless of political control. Europe faces rising defence commitments, costly green-transition pledges, and the return of EU fiscal rules, forcing governments into increasingly delicate trade-offs. Japan adds a new wrinkle: Prime Minister Takaichi is expected to take a tougher fiscal line just as the BoJ edges away from ultra-easy policy, a combination that may bring Japan closer to “normal” market scrutiny over debt sustainability. China continues to rely on quasi-fiscal channels and local-government borrowing—supporting growth tactically but intensifying long-term structural strains. All of this feeds directly into the wider macro narrative. Persistent deficits may cushion demand in 2026, but higher debt levels cloud the outlook for monetary policy—especially if central banks fear fiscal-driven inflation or rising term premiums. With the AI boom, the energy transition and geopolitics all demanding public funding, this may be the year markets discover where fiscal space genuinely runs out.

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**Energy and the AI Power Squeeze**
Layered on top of these fiscal concerns is a growing tension in global energy systems: whether supply can keep pace with the competing forces now driving demand sharply higher. AI is emerging as a particularly voracious consumer of electricity, with data-centre loads expanding so rapidly that several countries are already revising grid plans, pausing new connections, or ring-fencing capacity for strategic uses. But the AI surge is only one side of the story. Large emerging markets—India, Indonesia, Vietnam, Nigeria and others—are pushing through energy-intensive phases of industrialisation, and chart 5 below reinforces a familiar pattern: as economies climb the income ladder, per-capita energy consumption rises with them. Climate dynamics compound these pressures. More extreme heat is increasing cooling demand year-round, forcing households, firms and grids to draw more power simply to maintain normal activity. The result is a widening global energy trilemma: how to accommodate AI’s electricity appetite, support EM development, and cut emissions—all while managing increasingly fragile geopolitics. From Middle East supply risks to US–China competition over critical minerals and clean-tech supply chains, energy is once again a central axis of global conflict and coordination. And beneath it all lies the basic relationship shown in the chart: higher living standards remain tightly bound to greater energy use. In 2026, the world could feel that constraint more acutely than ever.

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**Climate Change and Green Bottlenecks**
Climate dynamics will loom even larger over the global outlook in 2026 as the tight links between rising temperatures, industrialisation and energy consumption become harder to ignore. Chart 6 below illustrates this long-run coupling: as global per-capita energy use has trended steadily higher—driven first by the industrialisation of the West, then by China’s rise, and now by the next wave of emerging-market growth—global surface temperatures have climbed in near-lockstep. Much of the world is entering a phase where climate impacts are no longer abstract risks but material economic forces: more extreme heat is lifting baseline energy demand for cooling, reshaping seasonal load patterns, and straining grids already stretched by AI-related electricity use. For developing economies, the challenge is even sharper. Their push to industrialise—an essential path to higher incomes—comes with rising emissions unless clean-energy capacity can scale dramatically faster than it has to date. Meanwhile, geopolitical shocks from the Middle East to the South China Sea threaten to disrupt the fossil-fuel supplies that still anchor the world’s energy system. Put simply, climate change is no longer a peripheral consideration for economic forecasting: it shapes energy availability, investment needs, and physical productivity in ways that will be central to the 2026 narrative.

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**The New Trade Shock: Tariffs, Tangles and Tactical Supply Chains**
While the global growth and trade backdrop ultimately proved better than investors had feared earlier in the year following President Trump’s initial tariff actions, much remains in flux in the year ahead. The US–China relationship, despite a recent, mildly conciliatory turn, remains fluid. Flashpoints and flare-ups in trade frictions remain possible, particularly in the absence of a comprehensive and conclusive trade agreement, with current concessions still only temporary. Uncertainty also surrounds the remainder of Trump’s previously threatened sectoral tariffs—such as those targeting semiconductors—which have yet to play out. A number of closely watched trade negotiations also hang in the balance, including prospective US bilateral deals with Canada and India. Meanwhile, US demand from its trading partners has already softened. As chart 7 below shows, US import shipments by weight have slid toward pandemic-era lows, while China’s export shipments have also declined.

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**Commodity Whiplash**
Amid the year’s flurry of events—including dramatic US trade actions, the longest-ever US government shutdown, monetary policy easing by central banks, and pockets of geopolitical tension—prices of gold and cryptocurrencies such as bitcoin have surged to fresh record highs. A wide range of factors has driven these rallies, from safe-haven demand to speculative inflows as momentum built. In gold’s case, institutional diversification needs have also played a role. However, the recent pullback in both gold and bitcoin (chart 8) —particularly the sharper correction in bitcoin—has raised questions about the durability of their longer-term rallies. Looking ahead, slower-moving but persistent central bank demand should continue to provide a floor for gold, while its outlook remains closely tied to global macro conditions. A lower-yield, high-uncertainty environment, coupled with solid jewellery, manufacturing, and speculative demand, would be supportive of further price gains. For bitcoin, whose retreat has accelerated following its earlier meteoric rise—pushing prices below $90,000 for the first time in over six months—volatility is likely to remain elevated. Its price will likely continue to swing with shifts in investor sentiment and expectations of broader adoption, with negative headlines prone to triggering sharp sell-offs and positive developments capable of fuelling renewed rallies.

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**Geopolitics in Overdrive**
The year ahead will continue to see many persistent geopolitical flashpoints, alongside emerging ones. Ongoing tensions—such as US–China frictions, the Russia–Ukraine war, and the back-and-forth between Israel and Hamas—will remain closely watched for potential flare-ups. Similarly, disputes between Thailand and Cambodia, despite an earlier US-brokered peace deal, continue to warrant attention, as renewed tensions could still emerge. More recently, China and Japan experienced a rapid escalation in tensions following remarks by Japan’s new Prime Minister Takaichi on Taiwan, prompting sharp responses from Chinese authorities, including advisories for citizens to avoid traveling to Japan. This latest dispute highlights how geopolitical tensions can impact economies through different channels—in this case, tourism. For Japan, as chart 9 below shows, mainland Chinese tourists have historically been the largest single source of tourism expenditure, meaning a near-complete halt would have a tangible economic impact.

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**The Election Supercycle**
The year ahead will also feature another slate of elections, with the US midterms likely the key event to watch. Traditionally, midterm elections result in swings against the incumbent President, making the upcoming one a bellwether of President Trump’s standing among voters, especially following recent electoral upsets this year. The period surrounding the midterm elections could bring a temporary phase of uncertainty, as past experience has shown (chart 10). A significant swing toward the Democrats could make Republican-led legislation difficult to pass and potentially signal a shift toward more bipartisan or nonpartisan policies. Investors will closely monitor all 435 House of Representatives seats and the 35 of 100 Senate seats up for election, with Republicans currently holding majorities in both chambers. Beyond the US, general elections in Sweden, New Zealand, and the anticipated election in Thailand will also draw attention due to their potential economy-specific implications.

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**Migration, Workforces and the New Demographic Reality**
Immigration and labour market issues are likely to remain prominent in the year ahead, reflecting broader concerns about long-term demographic trends in the world economy. Many developed countries continue to face rapidly aging populations as fertility rates remain low or decline further. At the same time, political resistance to using immigration to offset labour shortfalls has intensified in recent years. This trend is evident in the popularity of leaders perceived as hawkish on immigration, including US President Trump, the rise of far-right voices in Europe, and more recently, Japan’s new Prime Minister Takaichi. Despite these debates, net migration in many developed economies has not been sufficient to meaningfully reduce old-age dependency ratios relative to developing countries, as shown in chart 11 below. Japan is a striking example. Even before the rise of its current Prime Minister, the country faced a combination of a high old-age dependency ratio and very low five-year net migration, both expressed as a percentage of the working-age population. This highlighted a deep-seated demographic challenge, one that could worsen under tighter immigration policies if no other viable alternatives emerge.

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**Credit on a Tightrope**
The year will bring notable developments in debt and credit conditions, with implications for financial stability. Across major economies, pressure for higher public spending — and thus increased borrowing — is rising. Under US pressure, several NATO members have pledged to raise defence outlays; as of 2024, Poland leads in military spending as a share of GDP, followed by the US and UK (chart 12). Europe’s rapidly ageing populations make higher healthcare spending inevitable. With more high-income taxpayers retiring and a growing number of pensioners, countries face rising expenditure alongside pressure on income-tax revenues. Outside Europe, China’s debt-fuelled growth continues to draw scrutiny amid shrinking opportunities for efficient investment, while its property market remains a focus despite slower deterioration. In emerging Asia, domestic currency markets — including India and parts of Southeast Asia — are poised for potential volatility from foreign-investor flows, influenced by monetary policy, economic prospects, and geopolitical developments.

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As 2025 draws to a close, the global economy feels caught between relief and unease. Inflation has eased but not fully retreated, monetary-policy cycles are pulling in different directions, markets are oscillating between AI-driven enthusiasm and valuation nerves, and geopolitical tensions are pressing harder on trade, energy and investment flows. Against this backdrop, the twelve themes that follow set out the forces most likely to shape the macro, market and policy landscape in 2026. They range from the pivotal questions around whether AI will deliver visible productivity gains, how far the AI narrative can continue to support markets, and how policymakers will manage an unusually uncertain interest-rate outlook, to the broader pressures created by fiscal strains, climate stress, shifting trade patterns, geopolitical fragmentation, political transitions, and demographic change. Taken together, they offer a map of the terrain investors and policymakers will need to navigate in the year ahead — a world where cyclical dynamics and structural shifts arguably interact more tightly than at any point in the past decade, and where the biggest surprises are likely to emerge from those intersections.


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Charts of the Week: The Year Ahead

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