Democrats moved to within touching distance of control of the US Congress after Raphael Warnock became the first African-American in Georgia to win a Senate seat and fellow Democrat Jon Ossoff led his Republican opponent in a second contest in the state.
The rising prospect of a Democratic sweep in the two pivotal races would hand the party unified control in Congress for the first time in a decade, boosting Joe Biden’s chances of implementing his agenda as president when he takes office later this month.
It is also likely to trigger a bitter round of recriminations among Republicans, after they failed to secure Donald Trump’s re-election as president or preserve control of the Senate as a last-ditch opportunity to thwart Mr Biden.
Mr Warnock was declared the victor by the Associated Press in the early hours of Wednesday morning. With 98 per cent of votes counted, he had 50.6 per cent of the vote with a lead of about 53,000 over Republican incumbent Kelly Loeffler.
In the other Georgia Senate race, Mr Ossoff led Republican incumbent David Perdue by slightly more than 17,000 votes. Many of the remaining ballots are expected to come from areas that favour Democrats.
US stocks and Treasury yields rose on the prospect of a bigger fiscal stimulus that could feed through to inflation.
US 10-year Treasury yields hit 1 per cent for the first time in more than nine months, rising 0.06 percentage points to 1.02 per cent in Asia trading, reflecting market expectations of higher government spending. Yields rise when bond prices fall.
The two run-off elections were triggered after no candidate earned more than 50 per cent of the vote in the November 3 general election, and took place in the shadow of Mr Trump’s repeated refusal to accept his loss to Mr Biden.
The Associated Press, which the Financial Times relies upon to call elections, has yet to declare Mr Ossoff, a 33-year-old documentary film producer, the victor against Mr Perdue, 71, the former chief executive of Dollar General.
But Mr Ossoff, who would be the youngest senator since Mr Biden was sworn in at the age of 30 in 1973, claimed a win on Wednesday in a video posted to social media.
“It is with humility that I thank the people of Georgia for electing me to serve you in the United States Senate. Thank you for the confidence and trust that you have placed in me.”
Mr Perdue’s campaign said in a statement that the “exceptionally close election . . . will require time and transparency to be certain the results are fair and accurate”.
“We will mobilise every available resource and exhaust every legal recourse to ensure all legally cast ballots are properly counted,” the statement said. “We believe in the end, Senator Perdue will be victorious.”
Mr Warnock thanked his supporters in a speech delivered over video-link early on Wednesday. “We were told that we couldn’t win this election. But tonight we proved that with hope, hard work and the people by our side, anything is possible,” he said.
“I am going to the Senate to work for all of Georgia,” he added.
Mr Warnock, the senior pastor of Martin Luther King Jr’s Ebenezer Baptist Church in Atlanta, will become only the 11th black senator in US history. In his video speech, he thanked his 82-year-old mother, who grew up picking cotton in the southern US state.
Ms Loeffler refused to concede and said she still had a “path to victory”.
“This is a game of inches,” Ms Loeffler told supporters at an event in Atlanta before the race was called. “We are going to win this election.”
On Wednesday morning, Mr Biden congratulated Mr Warnock and Mr Ossoff and vowed to press ahead with his platform.
“The American people demand action and they want unity. I am more optimistic than I ever have been that we can deliver both,” he said in a statement.
On Capitol Hill, Democratic leaders were celebrating their wins and ramped up planning for legislative action in co-ordination with Mr Biden.
“Reverend Raphael Warnock and Jon Ossoff ran and won on the values of advancing equality and opportunity for working people across the state and the nation,” Nancy Pelosi, the House speaker, said in a statement. “In sending these two outstanding Democratic senators to Washington, Georgians cast their ballots for a fairer, accountable and more compassionate America.”
Economists were already factoring in a higher likelihood of additional fiscal expansion with Democrats in control of the Senate.
Aneta Markowska of Jefferies wrote in a note that she assumed $1tn in new stimulus over the next few months, adding “roughly two percentage points to growth over the next two years”. This meant that the economy would reach full employment earlier than expected, prompting the Federal Reserve to tighten monetary policy in early 2023 rather than 2024.
Republicans were considered the favourites heading into Tuesday’s run-offs, given that the party had dominated the political landscape in Georgia for decades. But Democrats were optimistic after Mr Biden’s narrow victory in the state’s presidential contest in November.
Returns on Tuesday indicated Mr Warnock and Mr Ossoff had reassembled the coalition that helped catapult Mr Biden to the White House, enjoying particularly strong support from black voters while also winning over some white suburbanites. In many Georgia counties, the Democratic Senate candidates outperformed Mr Biden’s November numbers.
It remained unclear how the Senate run-offs were affected by Mr Trump’s repeated attempts to undermine the result of the state’s presidential election, although data suggested turnout had fallen short of Republicans’ expectations in rural party strongholds.
“In a normal election cycle, without a president going psycho . . . I think the GOP would have significant advantages here. But that’s not the election we’re in,” Bill Crane, a political analyst in Atlanta, said ahead of Tuesday’s vote.
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