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Germany’s inflation surges to 2.4% as it narrowly skirts a technical recession

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Passers-by walk in the pedestrian zone of the Bavarian capital.

Peter Kneffel | Picture Alliance | Getty Images

Germany’s inflation surged to 2.4% in October, back above the European Central Bank’s 2% target, even as the country narrowly avoided a technical recession in the third quarter.

The preliminary print, announced by German statistics office Destatis, is harmonized across the euro area for comparability.

Analysts polled by Reuters had been expecting harmonized inflation to come in at 2.1% in October.

Harmonized inflation had dropped to 1.8% in September, after coming in at the European Central Bank’s 2% target in August.

So-called core inflation, which strips out more volatile food and energy costs, came in at 2.9% in October, the German statistics office said Wednesday, an increase from the 2.7% reading of September.

Services inflation also nudged higher to 4% in October, from 3.8% in the previous month.

The data comes after Destatis earlier on Wednesday posted a preliminary reading of Germany’s gross domestic product, which grew 0.2% in the third quarter compared to the previous three months.

The increase surprised analysts polled by Reuters who had anticipated a 0.1% decline, allowing Germany to narrowly avoid a technical recession — which is marked by two consecutive quarters of contraction.

Destatis also revised down the second-quarter GDP figures to a 0.3% contraction, from a previously reported 0.1% dip.

Economics

How we will cover a second Trump presidency

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This is the introduction to The Economist this week, a free weekly newsletter that includes a note from our editor-in-chief, Zanny Minton Beddoes.

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The world has just witnessed a historic turn. Donald Trump’s election as America’s 47th president was not a fluke: his victory was decisive. By securing more than 70m votes, he has won the popular vote for the first time in three attempts. The Republican Party now runs the Senate and is likely, within days, to secure control of the House. Add that the Supreme Court will be firmly entrenched with MAGA values for a generation. All this constitutes a stunning comeback and provides a powerful mandate for Mr Trump; in our cover leader we call him the most consequential American president since Franklin D. Roosevelt.

Our weekly edition considers what a second Trump presidency means. If Mr Trump has wrecked the old order, what will take its place? Will the return of Trumponomics spark a global trade war? How will Mr Trump handle the conflicts in Ukraine and the Middle East? His sweeping victory could set the tone for fellow nationalist populists such as Marine Le Pen, who hopes to secure France’s presidency in 2027. Mr Trump was too easily dismissed as an aberration in his first term. Not now. He has defined a new political era, for America and the world.

Subscribers can now sign up to participate in our live digital event on Friday November 8th, where our editors will discuss the election’s aftermath and what comes next. I also recommend the US in brief, our daily newsletter devoted to the most important matters in American politics.

Wherever you live, Mr Trump’s presidency will affect you. Over the next four years, we will report on and analyse the effects of the second Trump presidency on policy, business, economics and more—in America and around the world.

I invite you to be a part of this. If you already subscribe to The Economist, thank you.

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Economics

Opinion polls underestimated Donald Trump again

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FOR THE third presidential election in a row Donald Trump has stumped America’s pollsters. As results came in on election night it became clear that polls had again underestimated enthusiasm for Mr Trump in many states. In Iowa, days before the election a well-regarded poll by Ann Selzer had caused a stir by showing Kamala Harris ahead by three percentage points. In the end, Mr Trump won the state by 13 points.

Overall, the polling miss was far smaller. Polls accurately captured a close contest in the national popular vote and correctly forecast tight races in each of the battleground states. National polls erred by less than they did in 2020, and state polls improved on their dismal performances in 2020 and 2016. Yet this will be little comfort to pollsters who have been grappling with Mr Trump’s elusive supporters for years.

The Economist’s nationwide polling average found Kamala Harris leading by 1.5 percentage points, overestimating her advantage by around three points (many votes have yet to be counted), compared with an average error of 2.7 points in past cycles. State polling averages from FiveThirtyEight, a data-journalism outfit, had an average error of 3.0, smaller than the average of 4.2 points since 1976.

Chart: The Economist

But in contrast to 2016, when pollsters’ misses were concentrated in certain states, those in this cycle were nearly uniform across state and national polls. In the seven key states, polling averages underestimated Mr Trump’s margin by between 1.5 and 3.5 points (see chart). Pollsters may claim that their surveys captured the “story” of the election. But the awkward question remains: why did they underestimate Mr Trump for the third cycle in a row?

In past election cycles, pollsters have tweaked survey “weights” to make their samples of voters more representative. Although polls aim to sample the population randomly, in practice they often systematically miss certain groups. Weights are used to increase the influence of under-represented respondents. This has been especially true in recent years as response rates have plummeted.

After the 2016 election, when surveys systematically missed voters without college degrees and therefore underestimated support for Mr Trump, pollsters began accounting for respondents’ education levels. And after 2020, in an effort to ensure that Republican voters were represented, more pollsters began weighting their samples by respondents’ party registration and self-reported voting history. This caused the range of poll outcomes to narrow (weighting reduces the variance of survey results), with many pollsters finding similar results in key states and nationwide.

If there is a lesson from this year’s election, it could be that there is a limit to what weighting can solve. Although pollsters may artificially make a sample “representative” on the surface, if they do not address the root causes of differential response rates, they will not solve the underlying problem. They also introduce many subjective decisions, which can be worth almost eight points of margin in any given poll.

A pollster which gets those decisions right appears to be prophetic. But with limited transparency before the election, it is hard to know which set of assumptions each has made, and whether they are the correct ones. To their credit, the pollsters get together to conduct comprehensive post-election reviews. This year’s may be revealing. Still, without a breakthrough technology that can boost the representativeness of survey samples, weighting alone is unlikely to solve pollsters’ difficulty in getting a reliable read on what Trump voters are thinking.

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Economics

Donald Trump also won a reprieve from justice

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IT WAS A high-stakes election for all Americans, most of all Donald Trump. Had he lost, there was a fair chance that he would have gone to prison. He faces four separate sets of criminal charges, each with a prospect of jail time. Instead, once back in the White House, Mr Trump will be able to quash his two federal indictments and the two state cases against him are all but certain to be frozen.

That Mr Trump has managed to largely evade legal accountability is partly a result of his stalling for time, in anticipation of this very outcome. His strategy was aided by the Supreme Court, a third of whose justices he appointed. And yet his supporters see a justice system that is pliable and easily weaponised. To some in MAGA world, Mr Trump’s threats to train it against his political enemies now sound eminently reasonable.

The first post-election piece of business in Mr Trump’s trials will come in the hush-money case in Manhattan, where, barring further delay, he is due to be sentenced on November 26th. In May he was convicted on 34 counts of falsifying business records to conceal a payment to a porn star. Each charge carries a maximum of four years in prison. Yet there is hardly any chance of the judge imposing jail time—constitutional scholars agree that a sitting president cannot be locked up. In any event Mr Trump’s lawyers will probably ask to postpone sentencing until after his term in office ends.

Next come the two federal cases brought by Jack Smith, a special counsel in the Department of Justice (DOJ). Mr Trump stands accused of refusing to return classified documents upon leaving the White House and of attempting to overturn his defeat after the 2020 election. He denies wrongdoing in both. DOJ policy says that a president cannot be prosecuted while in office. Extinguishing these cases is simple: Mr Trump can fire Mr Smith and direct DOJ lawyers to drop them. He can do this even before his attorney-general is confirmed, notes Mary McCord, a former federal prosecutor.

In Georgia, meanwhile, Mr Trump faces charges in state court over his meddling in the 2020 election. The case is on hold while an appeals court weighs whether the prosecutor who brought the charges should be removed for alleged impropriety. If it ever gets going again, it will not include Mr Trump so long as he is the sitting president. But his 14 remaining co-defendants could still stand trial.

Then there is the civil litigation against Mr Trump for his role in the January 6th riot. Several Capitol police officers have sued him, alleging that he instigated the attack; courts are in the middle of sorting out whether his conduct is immune from civil liability. If they say it is not immune, precedent suggests that civil suits against a sitting president can proceed.

Soon enough attention will turn from Mr Trump’s legal jeopardy to that of his opponents, whom he has vowed to target. At a MAGA victory party attended by your correspondent, shortly before the conga line started, several of his supporters suggested that Joe Biden ought to drop the federal prosecutions against Mr Trump as a show of goodwill. Then one gleefully added that she would love to see their man “take the Bidens down”.

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