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Checks and Balance newsletter: Joe Biden’s state-of-the-union speech

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This is the introduction to Checks and Balance, a weekly, subscriber-only newsletter bringing exclusive insight from our correspondents in America.

Joe Biden delivered a party-convention (state-of-the-union) speech, writes James Bennet, our Lexington columnist

No one got whacked over the head with a cane, but in other respects Joe Biden’s state-of-the-union speech proved to be one of those moments in which I found myself wondering if American politics is returning to its 19th-century mores—thanks in part to social media and other 21st-century technology. The Progressive era introduced institutions that restrained some of the excesses of partisanship, such as the civil service. It also inculcated ideals of bipartisanship and decorum that are now fading away. They may have been debts vice was paying to virtue—even at its most seemingly decorous, politics is always a rough business—but I think we will miss them if they truly disappear. 

It is a bit melancholy that Mr Biden, with his veneration for the rites of Washington, would find himself compelled to deliver a state-of-the-union address that was in many respects more like a party-convention speech. But this has been coming for years, since even before a Republican congressman shouted “You lie” at President Barack Obama in 2009 during an address to a joint session of Congress. The next year, in a state-of-the-union speech, Mr Obama took the extraordinary step of chiding the Supreme Court, for a decision related to campaign finance—precedent for the shot Mr Biden took Thursday night at the justices for overturning Roe v Wade. In 2020 Nancy Pelosi, then speaker of the House, theatrically tore apart her copy of President Donald Trump’s speech after he finished delivering it.

Mr Trump, with his contempt for what he sees as the pretences of a cynical, transactional business, accelerated the trend towards open partisanship in all aspects of governing. The clownish displays by his minions in the House chamber on Thursday night, with their heckling and their MAGA hats or t-shirts, undermined the subsequent pious outrage of Republicans over Mr Biden’s politicking. 

It is an axiom of American politics that presidential elections are a referendum on the incumbent. But in this campaign Americans have a choice between two presidents, neither of whom they much like. For each man the path to a second term lies through negative partisanship, ie, persuading voters that the other guy is worse. It will be a brutal campaign. 

And that made the more humane moments in the House chamber on Thursday night seem all the more precious, even if they were flashes of old-style senatorial clubbiness. “I know you don’t want to hear any more, Lindsey, but I gotta say a few more things,” Mr Biden said towards the end of his speech, singling out Lindsey Graham, a senator from South Carolina. Mr Graham has remade himself as an acolyte of Mr Trump, but, clearly delighted by the presidential attention, he roared with laughter. 

And Mr Biden drew his most powerful contrast with Mr Trump by closing on a high note. It is another axiom of American politics that presidential campaigns are about the future, and Mr Biden is out to paint Mr Trump as obsessed with grievances from his past. Mr Biden’s refrain at the end of the speech became “I see a future,” as he envisioned more freedom, fairer taxation, less gun violence. “I see a future for all Americans,” he said, and—the partisanship of his speech notwithstanding—he added, “I will always be a president for all Americans.”

Economics

Will Elon Musk’s cash splash pay off in Wisconsin?

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TO GET A sense of what the Republican Party thinks of the electoral value of Elon Musk, listen to what Brad Schimel, a conservative candidate for the Supreme Court of Wisconsin, has to say about the billionaire. At an event on March 29th at an airsoft range (a more serious version of paintball) just outside Kenosha, five speakers, including Mr Schimel, spoke for over an hour about the importance of the election to the Republican cause. Mr Musk’s political action committees (PACs) have poured over $20m into the race, far more than any other donor’s. But over the course of the event, his name came up precisely zero times.

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Economics

German inflation, March 2025

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Customers shop for fresh fruits and vegetables in a supermarket in Munich, Germany, on March 8, 2025.

Michael Nguyen | Nurphoto | Getty Images

German inflation came in at a lower-than-expected 2.3% in March, preliminary data from the country’s statistics office Destatis showed Monday.

It compares to February’s 2.6% print, which was revised lower from a preliminary reading, and a poll of Reuters economists who had been expecting inflation to come in at 2.4% The print is harmonized across the euro area for comparability. 

On a monthly basis, harmonized inflation rose 0.4%. Core inflation, which excludes food and energy costs, came in at 2.5%, below February’s 2.7% reading.

Meanwhile services inflation, which had long been sticky, also eased to 3.4% in March, from 3.8% in the previous month.

The data comes at a critical time for the German economy as U.S. President Donald Trump’s tariffs loom and fiscal and economic policy shifts at home could be imminent.

Trade is a key pillar for the German economy, making it more vulnerable to the uncertainty and quickly changing developments currently dominating global trade policy. A slew of levies from the U.S. are set to come into force this week, including 25% tariffs on imported cars — a sector that is key to Germany’s economy. The country’s political leaders and car industry heavyweights have slammed Trump’s plans.

Meanwhile Germany’s political parties are working to establish a new coalition government following the results of the February 2025 federal election. Negotiations are underway between the Christian Democratic Union, alongside its sister party the Christian Social Union, and the Social Democratic Union.

While various points of contention appear to remain between the parties, their talks have already yielded some results. Earlier this month, Germany’s lawmakers voted in favor of a major fiscal package, which included amendments to long-standing debt rules to allow for higher defense spending and a 500-billion-euro ($541 billion) infrastructure fund.

This is a breaking news story, please check back for updates.

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Economics

First-quarter GDP growth will be just 0.3% as tariffs stoke stagflation conditions, says CNBC survey

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U.S. President Donald Trump speaks to members of the media aboard Air Force One before landing in West Palm Beach, Florida, U.S., March 28, 2025. 

Kevin Lamarque | Reuters

Policy uncertainty and new sweeping tariffs from the Trump administration are combining to create a stagflationary outlook for the U.S. economy in the latest CNBC Rapid Update.

The Rapid Update, averaging forecasts from 14 economists for GDP and inflation, sees first quarter growth registering an anemic 0.3% compared with the 2.3% reported in the fourth quarter of 2024. It would be the weakest growth since 2022 as the economy emerged from the pandemic.

Core PCE inflation, meanwhile, the Fed’s preferred inflation indicator, will remain stuck at around 2.9% for most of the year before resuming its decline in the fourth quarter.

Behind the dour GDP forecasts is new evidence that the decline in consumer and business sentiment is showing up in real economic activity. The Commerce Department on Friday reported that real, or inflation-adjusted consumer spending in February rose just 0.1%, after a decline of -0.6% in January. Action Economics dropped its outlook for spending growth to just 0.2% in this quarter from 4% in the fourth quarter.

“Signs of slowing in hard activity data are becoming more convincing, following an earlier worsening in sentiment,” wrote Barclays over the weekend.

Another factor: a surge of imports (which subtract from GDP) that appear to have poured into the U.S. ahead of tariffs.

The good news is the import effect should abate and only two of the 12 economists surveyed see negative growth in Q1. None forecast consecutive quarters of economic contraction. Oxford Economics, which has the lowest Q1 estimate at -1.6%, expects a continued drag from imports but sees second quarter GDP rebounding to 1.9%, because those imports will eventually end up boosting growth when they are counted in inventory or sales measures.

Recession risks rising

On average, most economists forecast a gradual rebound, with second quarter GDP averaging 1.4%, third quarter at 1.6% and the final quarter of the year rising to 2%.

The danger is an economy with anemic growth of just 0.3% could easily slip into negative territory. And, with new tariffs set to come this week, not everyone is so sure about a rebound.

“While our baseline doesn’t show a decline in real GDP, given the mounting global trade war and DOGE cuts to jobs and funding, there is a good chance GDP will decline in the first and even the second quarters of this year,” said Mark Zandi of Moody’s Analytics. “And a recession will be likely if the president doesn’t begin backtracking on the tariffs by the third quarter.”

Moody’s looks for anemic Q1 growth of just 0.4% that rebounds to 1.6% by year end, which is still modestly below trend.

Stubborn inflation will complicate the Fed’s ability to respond to flagging growth. Core PCE is expected at 2.8% this quarter, rising to 3% next quarter and staying roughly at that level until in drops to 2.6% a year from now.

While the market looks to be banking on rate cuts, the Fed could find them difficult to justify until inflation begins falling more convincingly at the end of the year.

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