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How one California beach town became Gavin Newsom’s nemesis

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AN IDYLLIC CITY in swanky Orange County, California, is not where you would expect to encounter a self-professed champion of the proletariat. Huntington Beach was first known for oil (the high school’s mascot is still the Oilers), then for surfing. Yet that is how Gracey Van Der Mark, its Republican mayor, sees herself and her city. A framed copy of a recent Los Angeles Times column suggesting (half facetiously) that Donald Trump should pick her for his vice-president hangs on her office wall. She says other cities are afraid of Gavin Newsom, the state’s Democratic governor, “because he’s acting like a tyrant”.

Mr Newsom’s alleged tyranny stems from his administration’s insistence that cities should build more housing, which the state badly needs and which many cities with wealthy residents and scores of beach-front bungalows resent. That is not his only crime, in the eyes of Ms Van Der Mark. Huntington Beach is fighting the state on several fronts, from housing regulations to voting rules to the flying of the gay-pride flag. The city’s ill-advised battles against Mr Newsom are emblematic of the friction between California’s many Republican pockets and the liberal state government; and of the evolution of California’s Republican Party during the Trump era.

Some 41% of Huntington Beach residents are registered Republicans, making them the city’s largest political tribe. But lately the city’s flavour of Republicanism has changed. In 2022 Ms Van Der Mark and several MAGA compatriots ran for the city council as a slate. All were elected, and now serve alongside three Democrats—though local elections there are technically non-partisan. Rhonda Bolton, a Democrat on the council, says the body’s politics have become a poisonous sludge that bears a passing resemblance to America’s House of Representatives.

This is not the first time Huntington Beach and the state, whose government sits in Sacramento, have been at loggerheads over housing. In 2019 the state sued the city for allegedly blocking new development. The trouble this time stems from the city’s failure to approve plans to build housing to meet projected demand, a process that every local government in the state must complete. The state and city sued each other over the matter. The city’s case, arguing that the state cannot force localities to build, was tossed out. The state’s suit is still pending.

The city council put several contentious measures on the primary ballot in March, including one that would introduce voter-ID rules. California’s attorney-general and secretary of state, who is in charge of voting processes, warned the city that such a measure contravenes state law. The measure passed anyway. Another legal battle probably awaits.

Ms Van Der Mark argues that Huntington Beach can set its own housing and voting rules because it is a charter city. A “home rule” provision in California’s constitution holds that such cities, which have adopted a kind of local constitution, can “make and enforce all ordinances and regulations in respect to municipal affairs”. But the state’s constitution does not define “municipal affairs”, leaving the courts to decide what is appropriate. More than a fifth of all cities in California have a charter. But Huntington Beach has become the biggest cheerleader for home rule. “Sacramento is using us as an example for every other city,” says Ms Van Der Mark. On this, at least, the city and state agree.

California Republicans were often more moderate than their eastern peers. As governor, Ronald Reagan favoured some environmental protections. Arnold Schwarzenegger travelled the globe warning about climate change. Yet Mr Trump’s influence has proved too powerful for such moderation to persist.

Ms Bolton says she believes most Huntington Beach residents are more moderate than the council, and will not stand for such chicanery for long. But the election cycle is against her. In November voters will get the chance to oust her and the other Democrats. Ms Van Der Mark is not up for re-election until 2026. She was tickled by the column suggesting that she is Mr Trump’s loyal soldier in Orange County, but insists she will not run for higher office unless she “is needed somewhere”.

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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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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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