German Election Shake-Up and U.S. Inflation Fears: The Week of February 24th
Germany’s election saw a leadership shift as Friedrich Merz takes over after Olaf Scholz’s defeat, while the far-right made gains. In the US, the economy leans heavily on high earners, who continue to spend despite inflation concerns. Investors worry inflation is creeping back as interest rates drop. Apple plans to add 20,000 U.S. jobs amid tariff threats, while Starbucks is cutting 1,100 corporate positions to streamline operations.
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The biggest takeaways from Germany’s election: Germany faces its second change of leader in fewer than four years after the head of the center-right opposition, Friedrich Merz, won Sunday’s election, which saw a surge for a far-right party and a stinging defeat for outgoing Chancellor Olaf Scholz. After the collapse of Scholz’s three-party government in November, it’s now up to Merz to restore stability to the European Union’s most populous country and traditional political heavyweight, which also has the continent’s biggest economy.
U.S. economy depends more than ever on rich people: Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon. The top 10% of earners – households making about $250,000 a year or more – are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets.
Investors fear inflation is coming back: After peaking in 2022 at 11% year on year, inflation across the rich world has steadily fallen. Until now. As central banks bring down interest rates, headline inflation across the rich world is edging up. It rose from 2.1% in September to 2.5% in December.
Apple will add 20,000 US jobs amid threat from Trump tariffs: Apple Inc., as it seeks relief from US President Donald Trump’s tariffs on goods imported from China, said that it will hire 20,000 new workers and produce AI servers in the US. The company said Monday that it plans to spend $500 billion domestically over the next four years, which will include work on a new server manufacturing facility in Houston, a supplier academy in Michigan and additional spending with its existing suppliers in the country.
Starbucks to lay off 1,100 corporate workers as sales sag: Starbucks will lay off 1,100 corporate employees and will not fill several hundred other open positions, the coffee chain’s CEO, Brian Niccol, said Monday. The cuts will not affect workers at the company’s cafes. In a message to corporate employees, Niccol said Starbucks is “simplifying our structure, removing layers and duplication and creating smaller, more nimble teams.”
We hope you have a productive week! Check out more insights from the Vested team here.
