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US consumers remained cautious about spending last month as inflation ticked higher

WASHINGTON (AP) — picked up last month and consumers barely raised their spending, signs that the economy was already cooling even before most tariffs were imposed.

Friday’s report from the Commerce Department showed that consumer prices increased 2.5% in February from a year earlier, matching January’s annual pace. Excluding the volatile food and energy categories, core prices rose 2.8% compared with a year ago, higher than January’s figure of 2.7%.

Economists watch core prices because they are typically a better guide of where inflation is headed. The core index has barely changed in the past year. Inflation remains above the ‘s 2% target, making it difficult for the central bank to cut its key interest rate anytime soon.

The report also showed that rebounded last month after falling by the most in four years in January. Yet much of the additional spending reflected price increases, with inflation-adjusted spending barely rising. The weak figure suggests growth is rapidly slowing in the first three months of this year as consumers and businesses turn cautious amid sharp changes in government policies.

“Inflation too hot and spending too cold,” said Stephen Brown, an economist at Capital Economics, a consulting firm, in an email. “The Fed is unlikely to cut interest rates this year.”

Brown estimates that economic growth could fall to zero in the first three months of this year, down from 2.4% in last year’s fourth quarter.

Inflation remains a top economic concern for most Americans, even as it has fallen sharply from its 2022 peak. rode dissatisfaction with higher prices to the presidency and promised to quickly bring down inflation, but the yearly rate is higher now than in September, when it briefly touched 2.1%.

Consumer spending rose 0.4% in February, though the gain was just 0.1% after adjusting for prices. The mild increase follows a sharp 0.6% drop in January.

The spending and inflation figures steepened a market downturn early Friday. The broad index fell 1.4%. The Dow Jones index fell more than 500 points and the fell as well.

The spending increase was driven by greater purchases of long-lasting goods, such as cars and appliances, which could reflect an effort by shoppers to buy things before tariffs are imposed. They are the kind of purchases that won’t likely be repeated in coming months.

Spending on services, including discretionary spending such as at restaurants and hotels, fell.

“The fact that consumers chose to increase outlays on goods that are about to see price increases at the expense of the far more economically important service sector provides insight into the mindset of the consumer,” said Joseph Brusuelas, chief economist at tax and advisory firm RSM.

Also Friday, the University of Michigan released its updated consumer sentiment survey for March, which showed a sharp drop in Americans’ outlook for the economy. The survey also found growing anxiety over inflation and jobs.

“This month’s decline reflects a clear consensus across all demographic and political affiliations,” said Joanne Hsu, director of the survey. “Republicans joined independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation.”

Trump has slapped 20% tariffs on all Chinese imports, 25% import taxes on steel and aluminum, and on Wednesday said he would hit imported cars with another 25% duty. Most economists, and the Federal Reserve, now expect inflation to tick higher this year as a result of the tariffs. Fed Chair Jerome Powell last week said elevated inflation from the tariffs could be temporary. But he also added the outlook was unusually uncertain given the swift changes in policy from the White House.

On a monthly basis, prices rose 0.3% in February from the previous month, the same as in January, while core prices increased 0.4%, the largest increase in more than a year. Increases at that pace, for a full year, would drive inflation far above the Fed’s 2% target.

One bright spot in the report was a big jump in incomes for the second straight month — they rose 0.8% in February from January. Higher income with weaker spending pushed up the savings rate, which can fuel future spending. But it also could reflect greater caution among consumers.

“Savings went up, consistent with reports of flagging , rising uncertainty about the future and reduced expectations for the future,” Carl Weinberg, chief economist at High Frequency Economics, said.

Consumer and business confidence in the economy has fallen sharply since Trump began rolling out tariffs, and a measure of Americans’ outlook for the future of the economy dropped to a 12-year low on Tuesday. Many polls find that most of the public sees the economy as fair or poor. A survey last month by the Pew Research Center found that 63% of Americans still see inflation as a “very big problem.”

Apparel company Lululemon on Thursday became the latest retailer to warn that slumping consumer confidence will hurt sales, while the parent company of Tommy Bahama, Lilly Pulitzer, and Johnny Was stores said that sales slowed to start the year as consumer sentiment darkened.

Nike previously issued a similar warning and expectations from major retailers like Target and Walmart have grown subdued as customers pull back.

A federal judge temporarily blocks parts of Trump’s anti-DEI executive orders

CHICAGO (AP) — A federal judge has temporarily blocked the from implementing parts of ‘s executive orders aimed at curbing diversity, equity and inclusion efforts among federal contractors and grant recipients.

Judge Matthew Kennelly of the U.S. District Court for the Northern District of Illinois halted the from requiring federal contractors or grant recipients from certifying that they don’t operate any programs in violation of Trump’s anti- executive orders.

That certification provision has stepped up pressure on companies and other organizations to revisit their DEI practices because if the government were to determine they violated the provision, they would be subject to crippling financial penalties under the .

Thursday’s ruling is in response to a filed last month by Chicago Women in Trades, a nonprofit founded in 1981 that helps prepare women for work in skilled construction trades and has several grants from with the Department of Labor. The organization argued that the president’s executive orders on DEI are so broad and vague that the organization had no way to ensure compliance, and thus they threaten its core mission.

The judge also blocked the Labor Department from freezing or canceling any funding with Chicago Women in Trades, and the Trump administration from pursuing any False Claims Act enforcement against them.

“This is a critical step in ensuring that the organization can continue the important work it leads — helping women put food on the table through careers in the skilled trades and making job sites safer for thousands of women over the last four decades,” Sabrina Talukder, a senior counsel with the Lawyers’ Committee for Civil Rights Under , which is representing the organization, said in a statement.

The Department of Justice did not immediately respond to requests for comment. A hearing on Chicago Women in Trades’ bid for a longer-lasting halt on Trump’s anti-DEI executive orders is scheduled for April 10.

The organization’s lawsuit is one of several challenging Trump’s executive orders targeting DEI programs in both the private and public sectors.

Trump signed an order his first day in office directing federal agencies to terminate all “equity-related” grants or contracts. He signed a follow-up order that included a requirement that federal contractors and grantees certify that they don’t “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

Kennelly’s decision comes nearly two weeks after an appeals court lifted a broader nationwide injunction against Trump’s anti-DEI executive orders in a separate lawsuit in Baltimore. But Thursday’s ruling is limited in scope because Kennelly declined to extend the temporary restraining order to other federal agencies.

Kennelly wrote that Chicago Women in Trades was likely to succeed in its arguments that parts of the executive orders are a violation of free speech rights and are unconstitutionally vague.

Although the government argued that the certification provision “implicates only illegal DEI programs, it has studiously declined to shed any light on what this means. The answer is anything but obvious,” Kennelly wrote.

Kennelly wrote that he extended his order to all Labor Department contractors and grant recipients because the vagueness of Trump’s executive orders, coupled with the threat of financial penalties, would likely pressure organizations to curb DEI programs in potential violation of free speech rights.

Rather than face potentially crippling penalties, “it is likely that many of these grantees will take the safer route and choose to simply stop speaking on anything remotely related to what the government might consider to promote DEI or equity. A nationwide restraining order is appropriate to protect grantees who cannot afford the risks inherent in biting the hand that feeds them,” Kennelly wrote.

During a hearing on Tuesday, the Trump administration argued that Chicago Women in Trades’ motion for relief was premature because it was based on speculation as to how the executive orders will be implemented.

But Kennelly wrote that said the concern that grant recipients “may be targeted by the Certification Provision is anything but speculative.” He noted that 60 organizations, including Chicago Women in Trades, received an email on March 20 from the Department of Labor instructing them to “immediately cease all activities related to DEI” consistent with the executive orders.

Kennelly also noted Chicago Women in Trades lost a subcontract with a DOL contractor trying to comply with the executive order.

Chicago Women in Trades has a long history of partnering with companies, state and federal agencies and other industry stakeholders trying to recruit more women into skilled trades. Its grant work with the dates back years, including two grants awarded under the first Trump administration under the Women in Apprenticeship and Nontraditional Occupations initiative, which aims to expand pathways for women seeking to enter skilled trades.

IRS crime fighting arm announces modernization program as financial crimes use more tech

WASHINGTON (AP) — As the nature of financial crime changes, with and AI increasingly used to perpetrate illegal acts, the ‘ crime fighting arm —IRS Criminal Investigation— is announcing a new program intended to improve how it interacts with financial institutions.

Called Feedback in Response to Strategic Threat —or CI-FIRST— the program unveiled Friday is intended to speed up subpoena requests, give banks better on how to detect criminal activity and build out investigations faster and more efficiently.

Under the Bank Secrecy Act, banks and financial institutions are required to send over a variety of suspicious activity reports to the after detecting potential money laundering or terrorist financing.

The goal for CI-FIRST is to help financial institutions more easily detect and report financial crimes tied to fentanyl trafficking, drug trafficking, human smuggling and other crimes — by streamlining subpoena requests and improving data-sharing with banks. IRS-CI Chief Guy Ficco said in a statement that “public-private partnerships thrive when everyone mutually benefits.”

Also on Friday, IRS Criminal Investigation released new statistics highlighting how the agency has investigated financial crimes using Bank Secrecy Act data.

The agency found $21.1 billion in tied to tax and financial crimes from 2022 to 2024, seized $8.2 billion in assets tied to criminal activity in the same period, and recouped $1.4 billion in restitution for crime victims, according to the agency.

“Behind all of these metrics are real crimes with real victims,” said Lauren Kohr, IRS-CI’s strategic engagement adviser. “A lot of times people look at BSA data or the Bank Secrecy Act as a regulatory requirement, but it’s really one of the sharpest tools enforcement as a whole has to trace fraud illicit money and dismantle these criminal networks.”

“And when illicit money moves, it’s these BSA reports,” she said “that tell us the story.”

IRS-CI special agents ran an average of 966,900 searches annually against currency transaction reports. A currency transaction report, or CTR, is a financial document that banks are required to file with Treasury for any cash transaction exceeding $10,000 in a single day.

In the past three years, roughly 67% of cases opened by IRS-CI involved one or more currency transaction reports below $40,000, with half of currency transaction reports involving amounts less than $22,230.

Despite the majority of reports coming in below $40,000, a group of Republican lawmakers is pursing raising the threshold.

Georgia Rep. Barry Loudermilk and nine other House Republicans have sponsored a bill called the Financial Reporting Threshold Modernization Act, which would raise the currency transaction reporting and Suspicious Activity Reporting thresholds to $30,000 and $10,000, respectively, and index the CTR threshold for every five years.

On April 1, the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions will hold a hearing on April 1 and the issue of CTR thresholds will come up.

Last December a Government Accountability Office report recommended Treasury help to “reduce the number of CTRs filed that are not used by law enforcement, such as by raising the reporting threshold or expanding criteria to allow for further exemptions.”

In addition to their financial crimes work, IRS Criminal Investigations has been called upon by the Trump administration to help with immigration enforcement.

Last month, Homeland Security Secretary Kristi Noem sent a request to Treasury Secretary Scott Bessent to borrow IRS Criminal Investigation workers to help with the immigration crackdown, according to a letter obtained by The Associated Press. It cites the IRS’s boost in funding, through the $80 billion infusion of funds the federal tax collection agency received under the Democrats’ Inflation Reduction Act has already been clawed back.

Wall Street tumbles, and S&P 500 drops 2% on worries about slower economy, higher inflation

NEW YORK (AP) — Another wipeout is swamping Friday on worries about a potentially toxic mix of worsening inflation and a U.S. economy slowing because of households afraid to spend due to the global trade war.

The was down 2% in afternoon trading and on track for one of its worst days of the last two years. It’s also heading for its fifth losing week in the last six after wiping out the last of its big gain from the start of the week.

The was down 719 points, or 1.7%, as of 2:25 p.m. Eastern time, and the composite was 2.6% lower.

Lululemon Athletica dropped 15.4% to lead the market lower, even though the seller of athletic apparel reported a stronger profit for the latest quarter than analysts expected. It warned that its revenue growth may slow this upcoming year, in part because “consumers are spending less due to increased concerns about and the economy,” said CEO Calvin McDonald.

Oxford Industries, the company behind the Tommy Bahama and Lilly Pulitzer brands, likewise reported stronger results for the latest quarter than expected but still saw its stock fall 5.6%. CEO Tom Chubb said it saw a “deterioration in consumer sentiment that also weighed on demand” beginning in January, which accelerated into February.

They’re discouraging points when one of the main worries hitting Wall Street is that President Donald Trump’s escalating tariffs may cause U.S. households and businesses to freeze their spending. Even if the tariffs end up being less painful than feared, all the uncertainty may filter into changed behaviors that hurt the economy.

A report on Friday morning showed all types of U.S. consumers are getting more pessimistic about their future finances. Two out of three expect unemployment to worsen in the year ahead, according to a survey by the University of Michigan. That’s the highest reading since 2009, and it raises worries about a job market that’s been the linchpin keeping the U.S. economy solid.

Another report released in the morning raised concerns after it showed a widely followed, underlying measure of inflation was a touch worse last month than economists expected. The data followed reports on other measures of inflation for the month, but this is the one the tracks pays the most attention to as it decides what to do with interest rates.

The report also showed that an underlying measure of how much income Americans are making, which excludes government social benefits and some other items, “has been treading water for the last three months,” said Brian Jacobsen, chief economist at Annex Wealth Management.

“Households aren’t in a good place to absorb a little tariff pain,” Jacobsen said. “The Fed isn’t likely to run to the rescue either as inflation moved up more than expected in February.”

The Fed has been keeping its main interest rate on hold this year after cutting it sharply in late 2024, in part because of worries about inflation remaining above its 2% target. While more cuts to rates would give the economy and financial markets a boost, they would also push upward on inflation.

The economy and job market have so far been holding up relatively well, but if they were to weaken while inflation stays high, it would produce a worst-case scenario called “stagflation.” Policy makers in Washington have few good tools to fix it.

Some of Wall Street’s sharpest losses on Friday hit companies that need customers feeling confident enough to spend, and not just on yoga wear or beach clothes. Delta Air Lines lost 5.1%. Cruise operator Royal Caribbean Group fell 4.4%. Casino operator Caesars Entertainment dropped 5.1%.

The heaviest weights on the market were Microsoft and other Big Tech stocks, whose massive sizes give their movements more sway over indexes. They and other stocks that had gotten caught up in the frenzy around artificial-intelligence have among the hardest hit in Wall Street’s recent sell-off.

Their prices had shot up so much more quickly than their already fast-growing revenues and profits that critics said they looked too expensive. CoreWeave, whose cloud platform helps customers manage complex AI infrastructure, was bouncing between modest losses and gains in its first day of trading on the Nasdaq.

On the flip side, among the relatively few rising stocks on Wall Street were those that can make money almost regardless of what the economy does, such as utilities. American Water Works rose 2.1%, for example.

Stock markets worldwide will likely remain shaky as an April 2 deadline approaches for more tariffs. That’s what Trump has called “Liberation Day,” when he will roll out tariffs tailored to the United States’ trading partners. In each case, he said the “reciprocal” tariff will match the burden the other country places on the United States, including things like value-added taxes.

In stock markets abroad, indexes fell sharply in Japan and South Korea as auto makers felt more pressure following Trump’s announcement that he plans to impose 25% tariffs on auto imports. Hyundai Motor fell 2.6% in Seoul, while Honda Motor fell 2.6%, and Toyota Motor sank 2.8% in Tokyo.

On Wall Street, Ford Motor fell 2.2%, and General Motors sank 1.5%. Even U.S. automakers selling vehicles in the country can feel the pain of such tariffs because their supply chains are spread throughout North America. Trump says he wants more to take place within the United States.

Thailand’s SET lost 1% after a powerful earthquake centered in Myanmar rattled the region, causing the prime minister to declare a state of emergency for the capital, Bangkok.

In the bond market, the yield on the 10-year Treasury tumbled to 4.25% from 4.38% late Thursday. It tends to fall when expectations for either U.S. economic growth or inflation are on the wane.

___

AP Writers Jiang Junzhe and Matt Ott contributed.

Spire Global taps new CFO

Vienna-based space-focused and company has appointed Alison “Ali” Engel as its new chief financial officer, effective April 1.

Engel brings nearly two decades of experience, most recently serving in that capacity for LeaseAccelerator from 2023 to 2024. Before that, she was CFO and treasurer of media company Gannett from 2015 to 2020, and of media holding company DallasNews (formerly A.H. Belo) from 2008 to 2014.

“Ali has a strong track record of steering companies through complex challenges in rapidly evolving industries,” Spire CEO Theresa Condor said in a statement. “Her many years of experience as a public company CFO bring steady leadership in financial controls, strategic business partnership and team building. I am excited to welcome her and the wealth of experience she brings to the team at Spire.”

She replaces interim CFO Thomas Krywe who will remain as an executive adviser for through April. In her new role, she will be based in the company’s headquarters.

“Spire has established a proven infrastructure in a dynamic industry with immense opportunities for innovation and growth,” said Engel in a statement. “I look forward to working alongside Theresa and the leadership team to drive the business forward, capitalizing on these opportunities, and ultimately, improving life on Earth with data from space.”

Engel received her Master of Professional Accountancy degree and a bachelor’s in accounting from the University of Texas at Austin.

Spire is a global provider of space-based data, analytics and space services that builds, owns and operates a fully deployed that observes the Earth in real time using radio frequency . Data from Spire’s satellites provides global weather intelligence, ship and plane movements and spoofing and jamming detection. Spire has more than 430 employees, with nine offices around the globe.

Take a look inside George Mason’s high-tech science and engineering labs

In a third-floor lab at University’s new, $107 million and Building in , students will dissect and study the effects of decomposition on human remains. A few floors away, their peers may dangle from harnesses while wearing sensors to research gaits while others test fly an autonomous blimp in a two-story aviary.

Open to students since January, George Mason’s 132,000-square-foot state-of-the-art interdisciplinary lab and research space was unveiled to the public Thursday. Part of the university’s Science and Campus, it brings together students from George Mason’s colleges of science, education and human development, engineering and computing, as well as visual and performing arts and offers classrooms, collaboration space and 30 labs for a range of hands-on training in the sciences and technology, including athletics and kinesiology, chemistry, robotics, autonomous vehicles, and forensic sciences.

Those labs and hands-on opportunities include a first-floor wind tunnel, additive spaces and even morgue storage, where forensic sciences students may stash their research subjects — including those plucked from George Mason’s nearby five-acre “body farm,” where people donate their bodies for decomposition studies in the name of science.

Mary Ellen O’Toole, a former FBI profiler who directs George Mason’s forensics science program, said the new space is a vast improvement over what the program had at the university’s main Fairfax headquarters, where it shared an old, cramped chemistry lab. Now the program has access to five shared labs where forensic research can be performed, including cadaver space, along with 3D imaging cameras that can help map out crime scenes in minute details.

“Forensics in 20 years is not going to be what forensics is today,” O’Toole said. “It’s going to be different. We’d like to think we’re preparing our students for that.”

George Mason Life Sciences and Engineering Building on the university's Science and Technology Campus in Manassas Photo by Evan Cantwell/George Mason University Office of University Branding
George Mason Life Sciences and Engineering Building on the university’s Science and Technology Campus in Manassas Photo by Evan Cantwell/George Mason University Office of University Branding

George Mason’s newest space aims to push forward scientific research, and it also serves as an anchor for Prince William County’s sprawling Innovation Park, which focuses on life sciences and technology and includes a growing town center, offering housing, retail and an entertainment district. In 2022, the county opened its Northern Virginia Bioscience Center in the park, offering space for expanding businesses and startups as Prince William focuses efforts on becoming a stronghold for the life sciences.

It also comes as state universities expand their presence in Northern Virginia, tapping into the region’s growth in tech.

In December, George Mason opened its $250 million, 345,000-square-foot Fuse tech hub at its Mason Square campus in County, which will focus on undergraduate and graduate education in technology and offer commercial space to industry partners. In February, Virginia Tech’s $302 million Innovation Campus opened in Alexandria’s growing National Landing neighborhood, offering graduate student programming in artificial intelligence, quantum computing and more.

About 4,500 students study at the Manassas campus, with some living there, said George Mason President Gregory Washington, though more student housing is needed, he added. Washington compares the Innovation Park development to nearby and Tysons in , both of which have quickly urbanized into dense, mixed-use communities. He also notes George Mason’s growing status, including being named as a top 50 public university by U.S. News and World Report in recent years. With more than 40,000 students, George Mason is Virginia’s largest public university and is known for its diverse student body and accessibility to first-generation students.

“We needed more labs on campus so that students can do more experimental learning, more hands-on,” Washington said. “This has been a godsend to be able to put all these labs here.”

Christina Winn, executive director of Prince William’s Department of Economic Development and Tourism, told Virginia Business in a statement that ‘s expansion, as well as the developing Innovation Park, “boosts our region’s edge. With top faculty and state-of-the-art labs, GMU is growing the talent pipeline and strengthening our position as a hub for innovation, entrepreneurship, and opportunity in Northern Virginia.”

General Dynamics subsidiary wins $1B Navy contract

A Connecticut-based subsidiary of -headquartered Fortune 500 contractor was recently awarded a $1 billion contract modification from the U.S. to purchase long lead time materials for Virginia-class Block VI .

The subsidiary, General Dynamics Electric Boat, announced the award on Tuesday. The company designs, builds, repairs and modernizes nuclear submarines for the Navy.

“This contract modification drives continuation of the crucial demand signal that the submarine industrial base needs to invest in the capacity and materials required to increase production volume,” Mark Rayha, president of General Dynamics Electric Boat, said in a statement. “Consistent funding for the supply base is essential to achieve the high-rate production the Navy requires of the entire submarine enterprise.”

Electric Boat is the prime contractor and lead design yard for the Virginia class and constructs them in a teaming arrangement with HII’s Newport News Shipbuilding in Virginia. The company says Virginia-class submarines are designed from the keel up to meet the full range of 21st-century mission requirements, including anti-submarine and surface ship warfare and special operations support.

According to the award announcement, work will be performed at various locations across the country, including California, New Jersey, Pennsylvania, Illinois, New Hampshire, South Carolina, Connecticut, Minnesota, Arizona, Massachusetts, Wisconsin and New York.

The project is expected to be completed by September 2035. Naval Sea Systems Command, Washington, D.C., is the contracting activity.

General Dynamics Electric Boat employs more than 24,000 people. General Dynamics employs more than 110,000 people worldwide and generated $47.7 billion in 2024 revenue.

Hooker exits Georgia warehouse as part of consolidation effort

Martinsville-based announced this week that it will end operations at its Savannah, Georgia, warehouse as part of a consolidation effort.

“Our decision to exit our Savannah distribution facility was not taken lightly,” Hooker Furnishings CEO Jeremy Hoff said in a statement. “We deeply appreciate the hospitality and support received from the state of Georgia, the Georgia Ports Authority and from the Liberty County Development Authority, in particular.”

Hooker began its Savannah operations in October 2021 for its Accentrics Home brand, which is positioned in the company’s Home Meridian (HMI) segment. Soon after operations began, Accentrics’ competitive position was “severely eroded by a sharp rise in post-COVID container freight rates from Asia, which jumped from approximately $4,000 to more than $25,000 per container in some cases at the time,” according to a news release.

“The sharp rise in container freight rates made ACH’s once-thriving line of high-volume, lower-priced, low-margin accent items unsustainable,” Hoff said. “Despite the temporary elevation in freight rates, it became obvious ACH’s business model would continue to be high-risk and low reward.”

In 2024, the company decided to close Accentrics and liquidate its inventory, part of a larger move to exit unprofitable businesses at HMI. Shortly after, Hoff said the company began reducing its Savannah footprint through a series of sub-leases and lease amendments with its landlord.

Hoff said the company is working with Liberty County, its Savannah warehouse employees, the landlord and new tenants to ensure a smooth transition.

“One of the most difficult aspects of this decision is the impact on our dedicated employees in Liberty County,” he said. “We take immense pride in the team we’ve built, and our priority is to support them during this transition. We are collaborating with the incoming tenant and other potential employers to help our employees secure positions, ideally within the same facility. Additionally, we have provided exit benefits to affected employees, with the goal of easing their transition, regardless of the path they choose.”

Hooker says it will provide more detail on the financial impact of the exit in its next earnings report on April 17. Right now, it expects charges of between $1.6 million and $2 million in fiscal 2025 and between $3 million to $4 million in fiscal 2026 related to the exit. It expects preliminary savings of between $750,000 to $1 million in net operating expenses in fiscal 2026, and annualized savings between $4 million to $4.5 million beginning in fiscal 2027. It stressed that these estimates are preliminary and could change.

Major law firm reaches deal with Trump to avoid White House order even as two other firms sue

WASHINGTON (AP) — A prominent international firm reached a deal with President Donald Trump on Friday to dedicate at least $100 million in free services and to review its hiring practices, averting a punishing executive order like the ones directed at nearly a half-dozen other major legal institutions in recent weeks.

The deal with Skadden, Arps, Slate, Meagher & Flom was announced just hours after two other sued in over executive orders that threatened the suspension of their attorneys’ security clearances and their access to federal buildings.

The contrasting approaches reflect divisions within the legal community on whether to fight or negotiate as Trump seeks to extract major concessions from some of the world’s most significant law firms and in some cases punish them over their association with prosecutors who previously investigated him. Besides Skadden Arps, another firm, Paul Weiss, has reached an agreement with the White House, a deal that prompted major backlash last week from lawyers who thought the capitulation set a bad precedent.

In a message to his firm, Skadden Arps managing partner Jeremy London said the firm had learned in recent days that the Trump administration intended to issue an executive order targeting it over its pro bono legal work and its diversity, equity and inclusion initiatives.

“When faced with this information, we carefully considered what the right path would be for us, and the answer was not obvious. We were thoughtful and deliberate in determining the steps we might take, knowing that the decisions we were grappling with would have fundamental consequences for our firm,” London wrote in the message, which was obtained by The Associated Press.

He added that the firm opted to enter negotiations with the administration in hopes of warding off the issuance of an executive order.

“We entered into the agreement the President announced today because, when faced with the alternatives, it became clear that it was the best path to protect our clients, our people, and our Firm,” he wrote.

The two firms who sued on Friday, Jenner & Block and WilmerHale, say in their complaints that the orders amount to an unprecedented assault on the legal system and represent an unconstitutional form of presidential retaliation. Court hearings were set for later Friday afternoon on the firms’ requests that judges block enforcement of the order.

“Our Constitution, top to bottom, forbids attempts by the government to punish citizens and lawyers based on the clients they represent, the positions they advocate, the opinions they voice, and the people with whom they associate,” said the complaint from Jenner & Block, filed in federal court in Washington.

The firms say the executive orders, issued earlier in the week, have already affected their business, with Jenner & Block saying that one client has been notified by the Justice Department that the firm cannot attend a meeting at the building next week.

“That client therefore will either need to attend the meeting without outside counsel or would need to retain new outside counsel before April 3,” the says.

The WilmerHale complaint raises similar concerns, calling it a flagrant violation of the firm’s rights.

“It imposes severe consequences without notice or any opportunity to be heard; it uses vague, expansive language that does not adequately inform WilmerHale (or its clients) of what conduct triggered these extraordinary sanctions; and it unfairly singles out WilmerHale based on its perceived connections to disfavored individuals and causes,” the lawsuit says.

Targeted law firms have taken different approaches to executive orders that threaten to upend their business model and chill their legal practice.

Earlier this month, the law firm of Perkins Coie also challenged the Trump order in court and succeeded in getting a judge to temporarily block enforcement. The Paul Weiss firm, by contrast, cut a deal with the White House days after being targeted, with its chairman saying that the order presented an “existential crisis” for the firm and that he wasn’t sure it could have survived a protracted fight with the Trump administration.

The executive order against Jenner & Block this week stemmed from the fact that the firm once employed Andrew Weissmann, a lawyer who served on special counsel Robert Mueller’s team that investigated Trump during his first term in office over potential connections between his 2016 campaign and Russia. Weissmann, a frequent public target of Trump’s ire, left the firm four years ago.

Mueller has retired from WilmerHale, but the White House executive order from Thursday mentions him as well as another retired partner and a current partner who all served on Mueller’s team.

“While most litigation requires discovery to unearth retaliatory motive, the Order makes no secret of its intent to punish WilmerHale for its past and current representations of clients before the Nation’s and for its perceived connection to the views that Mr. Mueller expressed as Special Counsel,” the WilmerHale lawsuit says.

The first executive order targeted Covington & Burling, a firm that has provided legal representation to special counsel Jack Smith, who investigated Trump during the Biden administration and filed two separate criminal cases that were abandoned after Trump’s election win last November.

Health and Human Services will lay off 10,000 workers and close agencies in a major restructuring

WASHINGTON (AP) — In a major overhaul, the U.S. Department of Health and Human Services will lay off 10,000 workers and shut down entire agencies, including ones that oversee billions of dollars in funds for addiction services and community centers across the country.

Health Secretary Robert F. Kennedy Jr. criticized the department he oversees as an inefficient “sprawling bureaucracy” in a video announcing the restructuring Thursday. He faulted the department’s 82,000 workers for a decline in Americans’ health.

“I want to promise you now that we’re going to do more with less,” Kennedy said in the video, posted to social media.

The restructuring plan caps weeks of tumult at the nation’s top health department, which has been embroiled in rumors of mass firings, the revocation of $11 billion in public health funding for cities and counties, a tepid response to a measles outbreak, and controversial remarks about vaccines from its new leader.

Still, Kennedy said a “painful period” lies ahead for , which is responsible for monitoring infectious diseases, inspecting foods and hospitals, and overseeing health insurance programs for nearly half the country.

Overall, the department will downsize to 62,000 positions, losing nearly a quarter of its staff — 10,000 jobs through and another 10,000 workers who took early retirement and voluntary separation offers encouraged by ‘s administration.

The staffing cuts were first reported by The Journal.

experts, doctors, current and former HHS workers and congressional Democrats quickly panned Kennedy’s plans, warning they could have untold consequences for millions of people.

“These staff cuts endanger public health and food safety,” said Brian Ronholm, director of food policy at Consumer Reports, in a statement. “They raise serious concerns that the administration’s pledge to make Americans healthy again could become nothing more than an empty promise.”

But Kennedy, in announcing the restructuring, blasted HHS for failing to improve Americans’ lifespans and not doing enough to drive down chronic disease and cancer rates.

“All of that money,” Kennedy said of the department’s $1.7 trillion yearly budget, “has failed to improve the health of Americans.”

Cancer death rates have dropped 34% over the past two decades, translating to 4.5 million deaths avoided, according to the American Cancer Society. That’s largely due to smoking cessation, the development of better treatments — many funded by the National Institutes of Health, including groundbreaking immunotherapy — and earlier detection.

The reorganization plan also underscores Kennedy’s push to take more control of the public health agencies — the NIH, the Food and Drug Administration, and the Centers for Disease Control and Prevention — which have traditionally operated with a level of autonomy from the health secretary. Under the plan, external communications, procurement, information and human resources will be centralized under HHS.

FDA and CDC face the deepest cuts

Federal health workers — stationed across the country at agencies including at the NIH and FDA, both in Maryland — described shock, fear and anxiety rippling through their offices Thursday. Workers were not given advance notice of the cuts, several told The Associated Press, and many remained uncertain about whether their jobs were on the chopping block.

“It’s incredibly difficult and frustrating and upsetting to not really know where we stand while we’re trying to keep doing the work,” said an FDA staffer who spoke on condition of anonymity out of fear of retaliation. “We’re being villainized and handicapped and have this guillotine just hanging over our necks.”

HHS on Thursday provided a breakdown of some of the cuts.

__ 3,500 jobs at the FDA, which inspects and sets safety standards for medications, medical devices and foods.

__ 2,400 jobs at the CDC, which monitors for infectious disease outbreaks and works with public health agencies nationwide.

__ 1,200 jobs at the NIH, the world’s leading public health research arm.

__ 300 jobs at the Centers for Medicare and Medicaid Services, which oversees the Affordable Care Act marketplace, Medicare and Medicaid.

HHS said it anticipates the changes will save $1.8 billion per year but didn’t give a breakdown or other details.

The cuts and consolidation go far deeper than anyone expected, an NIH employee said.

“We’re all pretty devastated,” said the staff member, who spoke on condition of anonymity for fear of retaliation. “We don’t know what this means for public health.”

Union leaders for CDC workers in Atlanta said they received notice from HHS on Thursday morning that reductions will focus on administrative positions including human resources, finance, procurement and information technology.

At CMS, where cuts focus on workers who troubleshoot problems that arise for Medicare beneficiaries and Affordable Care Act enrollees, the result will be the “lowest customer service standards” for thousands of cases, said Jeffrey Grant, a former deputy director at the agency who resigned last month.

Kennedy plans to shutter some agencies, even those created by Congress

Beyond losing workers, Kennedy said he will shut down entire agencies, some of which were established by Congress decades ago. Several will be folded into a new Administration for a Healthy America, he said.

Those include the Health Resources and Services Administration, which oversees and provides funding for hundreds of community health centers around the country, as well as the Substance Abuse and Mental Health Services Administration, which funds clinics and oversees the national 988 hotline. Both agencies pump billions of dollars into on-the-ground work in local communities.

SAMHSA was created by Congress in 1992, so closing it is illegal and raises questions about Kennedy’s commitment to treating addiction and mental health, said Keith Humphreys, a Stanford University addiction researcher.

“Burying the agency in an administrative blob with no clear purpose is not the way to highlight the problem or coordinate a response,” Humphreys said.

The Administration for Healthy America will focus on maternal and child health, environmental health and HIV/AIDS work, HHS said.

The Administration for Strategic Preparedness and Response, created by a signed by then-Republican President George W. Bush and responsible for maintaining the national stockpile that was quickly drained during the COVID-19 pandemic, will also be eliminated and moved into the CDC.

Republican Sen. Mike Rounds of South Dakota said the ramifications of Kennedy’s plans for HHS are unclear.

“We’ll just wait and see what it is, and then we’ll go back and try to fix if there is something broken,” Rounds said. “That’s the approach we’ve taken so far.”

But Democratic Sen. Patty Murray of Washington warned that the fallout is clear.

“It does not take a genius to understand that pushing out 20,000 workers at our preeminent health agencies won’t make Americans healthier,” Murray said in a statement. “It’ll just mean fewer health services for our communities, more opportunities for disease to spread, and longer waits for lifesaving treatments and cures.”

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Associated Press writers Matthew Perrone, Lauran Neergaard and Kevin Freking in Washington; JoNel Aleccia in Temecula, Calif.; Carla K. Johnson in Seattle; and Mike Stobbe in New York contributed.