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The beginning of the end of the Trump era

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THE MOST jarring difference between Donald Trump’s first and second inaugurations will be the setting. Eight years ago he spoke in front of the Capitol building on a relatively mild January day, but frigid temperatures have pushed the ceremony inside for the first time in 40 years. A closer look at plans for this scaled-back event also offers hints at some of the profound contrasts between 2017 and 2025.

Mr Trump’s vice-president will be sworn in first. Last time he had at his side the steady hand of Mike Pence, a living embodiment of the orthodoxies of Reagan Republicanism. Mr Pence had spent more than a decade in the House of Representatives before serving as governor of Indiana for four years. He knew the ways of Washington and was friendly with all of the party’s core constituencies: free marketeers, social conservatives and foreign-policy hawks. His choice was a sign of humility from Mr Trump meant to reassure his party after a hostile takeover.

His choice this time around sent the opposite message. J.D. Vance, 40-years-old, has half as much experience as Mr Trump as an elected official in Washington. He spent his brief time in the Senate challenging the foundations of Republican thought on international relations and economics. His elevation is a sign that Mr Trump is self-assured enough to not need a guide so much as an attack dog and loyal servant—something he believes Mr Pence was not in the aftermath of the 2020 election.

Others who will be present—or at least those invited before the guest list was radically reduced—are evidence of the great paradox of Mr Trump’s second term. While he is less constrained, he takes office with much of America and the world seemingly less anxious about him in power.

Mr Trump was something of an international oddity in 2016. Some, like the prime minister of Japan, swiftly adapted to the new reality and visited Mr Trump in New York. This time Mr Trump has a broader international fan base. Javier Milei, the president of Argentina, plans to attend, along with Italy’s prime minister, Giorgia Meloni. The Chinese Communist Party will send the country’s vice-president, and India’s foreign minister will be there as well. Mr Trump had been conducting shadow foreign policy for weeks—with his advisers playing a role in the Gaza ceasefire—so it comes as no surprise to see such a broad guest list from abroad.

The American public’s reaction also has been starkly different. Rather than the palpable sense of dread apparent in January 2017, the streets are filled with tourists and there are parties taking place throughout the city. Organisers of an anti-Trump protest in Washington had hoped some 50,000 people might show up; around 5,000 did. Snoop Dogg, once a Trump critic, performed at the Crypto Ball (the president-elect, naturally, launched a new cryptocurrency the same day, called $TRUMP). The below-freezing temperatures should help to maintain this collective shrug from Mr Trump’s detractors. While the streets will probably be quiet, the rotunda, where Mr Trump will be sworn in, will be packed tight with America’s elite.

Mr Trump is at the peak of his power, before he has had to do anything unpopular, or disappoint any of the factions competing for his attention. Mark Zuckerberg, Jeff Bezos and Elon Musk—all open Trump critics during the first term—have struck friendlier notes and are set to attend the inauguration. Even Bill Gates recently said he was “impressed” with the new president. Towards the end of the campaign, Forbes estimated that Kamala Harris had support from 83 billionaires to Mr Trump’s 52. Since winning, many business titans have been more open. “Everybody wants to be my friend,” Mr Trump observed in December. No doubt he is aware that much of this is self-interest as his administration is set to write new regulations and retire old ones, all of which could directly affect profit margins.

Also in attendance will be Mike Johnson, the House speaker, and John Thune, the Senate majority leader. For all his rage against the deep state and his own advisers who he believed undermined him last time around, Mr Trump also had his fair share of scuffles with Congress. More deftly handling the politicians on the other end of Pennsylvania Avenue will be as important for the Trump agenda as his war against the entrenched bureaucracy.

Here Mr Trump has made more effort in the run up to his second term. He personally intervened to ensure Mr Johnson remained speaker, and he has hosted various factions of Congress at Mar-a-Lago to talk strategy. Mr Trump is always unpredictable, but co-ordination has improved. For example, some executive actions may be delayed so that revenue savings can be passed by Congress and counted against revenue losses from tax-cut extensions. This may be the fate of Joe Biden’s ill-conceived executive order on student-loan bailouts.That does not mean the beginning of the new presidency will be quiet: expect a flurry of executive orders on immigration and trade right away.

Yet Mr Biden also issued plenty of executive orders on day one. Looking at them now–the reversal of the Muslim ban, the Covid-19 eviction moratorium, the whole-of-government initiative on racial equity–is like finding a time capsule buried in 2020. It is also a reminder that lasting change cannot be made by presidential fiat. To endure, policies need backing from Congress.

And while the Republican Party is very much outwardly MAGA—and agrees on cutting taxes, restricting immigration and bolstering energy production—many pre-Trump orthodoxies prevail. As he works with Congress, Mr Trump may find himself giving way to policies that don’t seem particularly revolutionary. “The striking thing about Republicans in Congress now is that they’re pretty recognisable” when compared to their Obama-era predecessors, argues Yuval Levin, a senior fellow at the American Enterprise Institute, a think-tank, and alumnus of George W. Bush’s administration. “They haven’t changed as much as you would think, given how different Trump is from where Republicans have been before.”

The Senate will also play its traditional role of slowing down an ambitious president’s goals; it’s entirely possible that only Marco Rubio, nominee for secretary of state, will be approved on the first day of the Trump administration. Matt Gaetz, the controversial pick for attorney general, already saw his nomination collapse. Others could too, depending how they fare in their hearings.

Mr Trump will move rapidly; the question is whether his policy changes stick. The beginning of the end of the Trump era will kick off with large-scale deportations on Tuesday, once the inauguration festivities have come to a close. Once the initial shock and awe have worn off, it will be on Mr Trump to fight tougher battles of persuasion to create a real legacy.

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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