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Winning North Carolina, Donald Trump seizes the early advantage

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DONALD TRUMP won the swing state of North Carolina as he took an early advantage in his race for the White House against Kamala Harris. The vice-president’s path to victory narrowed as early results showed her underperforming Joe Biden’s showing of four years ago. At 11pm Eastern time, early vote counts in America’s presidential race showed an early advantage in the electoral college for Mr Trump. There were warning signs for the Harris campaign as the first results poured in.

Several hours after the first polls closed, the other six of the seven swing states seen as vital to the two candidates’ chances for winning the electoral college—Arizona, Georgia, Michigan, Nevada, Pennsylvania and Wisconsin—were too close to call. Yet Mr Trump enjoyed a lead of three percentage points in Georgia, with 93% of the state’s vote counted. In North Carolina, Mr Trump’s lead was similar with just over 88% of the vote counted.

If Mr Trump’s lead holds up there, the pathway to an electoral-college victory for Ms Harris would narrow considerably, requiring her to sweep the “blue wall” states of Michigan, Pennsylvania and Wisconsin, where the vote count was proceeding more slowly.

Outside the key battlegrounds, the early picture was no more encouraging for the Harris campaign. In Virginia, which Mr Biden won comfortably in 2020, Ms Harris led narrowly with 82% of votes counted. She seemed likely to win Virginia eventually but was lagging behind Mr Biden’s performance in suburban counties such as Loudoun, outside Washington, DC. There, similarly to other suburban jurisdictions in Virginia, Ms Harris’s share of a near-complete vote trailed Mr Biden’s performance four years ago by more than six percentage points. That is a concerning trend if it extends to Pennsylvania and Michigan, where suburban voters are crucial to Ms Harris’s prospects.

In Florida, a former battleground that Mr Biden lost by just over three percentage points last time, Ms Harris was doing even worse, underperforming Mr Biden’s margin by ten percentage points with almost all of the state vote counted. Across all early reporting states, Ms Harris’s performance in counties posting near-complete votes to Mr Biden’s numbers in 2020 showed the vice-president underperforming.

Ms Harris and her allies will have to hope that the picture unfolds differently in Pennsylvania, the most important of the three blue-wall states, which always looked like a crucial state for both her and Mr Trump. Here there were at least a few encouraging signs. With just over a third of the expected vote posted in Montgomery County, a populous suburb of Philadelphia that leans Democratic, Ms Harris led with 68% of the vote, more than five percentage points better than Mr Biden’s performance four years ago. That is the sort of result she will probably need in all of Philadelphia’s blue-tinted-collar counties if she is to hold off Mr Trump’s strength in less populated rural areas.

Michigan’s vote was too incomplete to judge even several hours after its polls closed, and Wisconsin, which Mr Biden won by just 20,000 votes four years ago, Mr Trump led narrowly with 61% of the vote counted. A similar early picture prevailed in Arizona, a state where pre-election polls had shown Mr Trump held his most significant advantage.

Because the trio of Pennsylvania, Michigan and Wisconsin remained in play at 11pm EST—and no other state pegged for Ms Harris had fallen to Mr Trump—the election remained in the balance. What seemed clear is that if Ms Harris were to defy the early run of results and squeeze out a victory, it would emerge from the key Rust Belt states and would probably be as close as the razor-thin margins Mr Biden won there in 2020.

Economics

PCE inflation December 2024:

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Customers shop for food at a grocery store on Jan. 15, 2025 in Chicago, Illinois.

Scott Olson | Getty Images News | Getty Images

Inflation closed out 2024 on a strong note, as a price gauge the Federal Reserve focuses on came in well above the central bank’s target.

The personal consumption expenditures price index increased 2.6% on a year over year basis, 0.2 percentage point higher than the November reading and in line with the Dow Jones estimate.

Excluding food and energy, core PCE registered a 2.8% reading, also meeting expectations and the same as the prior month. Though the Fed considers both readings, historically officials have seen core as the better gauge of long-run inflation.

On a monthly basis, headline PCE rose 0.3% while core increased 0.2%, both in line with forecasts as well.

The Fed targets annual inflation at 2%, a level the price gauge has not seen since February 2021.

The report comes two days after the central bank voted unanimously to hold its key interest rate in a range between 4.25%-4.5%, taking a break after three consecutive cuts totaling a full percentage point.

In remarks delivered Friday morning, Fed Governor Michelle Bowman said she expects inflation to decelerate through 2025, but thinks the central bank should stay on hold until there are clear signs that is happening.

“There is still more work to be done to bring inflation closer to our 2 percent goal. I would like to see progress in lowering inflation resume before we make further adjustments to the target range,” Bowman said in remarks before business leaders in Portsmouth, N.H. “I do expect that inflation will begin to decline again and that by year-end it will be lower than where it now stands.”

The report Friday also showed that personal income increased 0.4% as forecast, while spending rose 0.7%, or one-tenth of a percentage point ahead of the estimate.

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German inflation, January 2025

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Customers waiting at the checkout in a supermarket.

Markus Scholz | Picture Alliance | Getty Images

German inflation was unchanged year-on-year at 2.8% in January, preliminary data from the country’s statistics office Destatis showed Friday in the last reading before Germans head to the polls next month.

The reading was also in line with a forecast from economists polled by Reuters. The print is harmonized across the euro area for comparability. 

On a monthly basis, the harmonized consumer price index fell by 0.2%

Germany’s inflation rate has now stayed above the European Central Bank’s 2% target for the fourth month in a row, after falling below that threshold in September last year.

This roughly mirrors the development of re-accelerating inflation in the wider euro area. The European Central Bank on Thursday said that disinflation in the bloc “is well on track” and has broadly developed in line with staff projections.

Euro area inflation came in at 2.4% in December. The January figures are slated for release next week.

The January inflation print is among the final key economic data released before Germany’s election on Feb. 23, which is taking place earlier than originally scheduled after the collapse of the ruling coalition in November 2024.

Germany’s economy has been one of big topics during campaigning next to immigration, as the country has been grappling with lackluster economic growth and the renewed rise of inflation.

The government earlier this week slashed gross domestic product expectations to 0.3% for full-year 2025, after annual GDP contracted in the last two years. Quarterly growth has also been sluggish, even as the economy has so far avoided a technical recession characterized by two consecutive quarter of contraction.

Non-harmonized inflation is expected to average 2.2% this year, the government added in its annual economic report.

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Donald Trump revives ideas of a Star Wars-like missile shield 

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IN THE LATE 1980s Edward Teller, the father of the hydrogen bomb, and Lowell Wood, an astrophysicist, proposed a seemingly bizarre scheme to defend America against missile attack. The “Brilliant Pebbles” system envisaged thousands of small satellites in low-Earth orbit, each housing heat-seeking missiles to take out incoming Soviet nukes long before they released their warheads. The idea faded, not least because the technology seemed distant. Now Donald Trump is resuscitating it.

On the campaign trail Mr Trump promised to build an “Iron Dome” for America, referring to an Israeli missile-defence system. The name is a misnomer. The Israeli system is designed to take out short-range rockets. What Mr Trump meant, and spelt out in an executive order published on January 27th, was a more ambitious effort to detect and counter intercontinental ballistic missiles (ICBMs) and the like. America already has a system designed to do that, known as Ground-Based Midcourse Defence (GMD), which relies on interceptors in Alaska and California.

Mr Trump’s proposal differs in important respects. One is its scope. GMD was intended to parry limited attacks involving a small number of ballistic missiles, such as might occur in an attack by North Korea. Mr Trump’s shield is supposed to block “any foreign aerial attack”, which would imply not only both cruise and ballistic missiles, but also a full-scale strategic attack by Russia or China involving many hundreds of missiles at once.

Critics of missile defence say this is folly, because it is generally cheaper to build additional offensive systems than interceptors to stop them. Russia and China—which are building missile shields of their own—have also argued that American defences risk undermining nuclear deterrence, because they might one day allow America to strike enemies without fearing retaliation. Advocates retort that the missile threat has changed: long-range non-nuclear missiles could now paralyse military facilities in the continental United States, allowing enemies to coerce America into staying out of a distant war.

In any case, Mr Trump’s favoured design is also noteworthy. GMD targets incoming missiles when they are in mid-flight. In theory it is easier to take out a missile in its “boost phase” (as it is taking off), when it is moving more slowly. The problem is that this is a fleeting moment—three to five minutes for ICBMs.  The new order calls for “proliferated space-based interceptors capable of boost-phase intercept”. That amounts to a Brilliant Pebbles-like system: a lot of small, armed satellites, some of which would be above Russia, China and other foes at all times.

The cost of building tiny computers and putting thousands of them into orbit is far lower than it was in Mr Teller’s days—partly thanks to Elon Musk. But it is still eye-wateringly expensive, and liable to hoover up a good chunk of the defence budget. America would require 500 satellites in total to have just three to four interceptors in range of North Korean launchpads, estimates Bleddyn Bowen of Durham University; hundreds more than that would probably be needed, he says.

A key technical challenge will be building space sensors with “fire-control-quality tracking”—good enough at spotting and tracking enemy missiles to guide interceptors to them—says Tom Karako of CSIS, a think-tank. But if the technology proves mature, the implications could go beyond missile defence. “We will see the emergence, gradual understanding, and eventually acceptance of ‘space fires’,” says Mr Karako, which could include satellites capable of targeting, with both explosive and electronic means, targets on the ground, those in the air and other satellites in orbit.

There are many doubters. Mr Trump aired similar ideas in his first term but failed to back them with hard cash. Spending for an American Iron Dome will compete with a string of other priorities, from a bigger navy to more nuclear weapons. “It’s always a budget question,” says Mr Karako. “Show me your budget for missile defence, and I’ll tell you what your ‘Iron Dome for America’ is.”

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