By CHRISTOPHER RUGABER, Associated Press Economics Writer

WASHINGTON (AP) — U.S. consumers cut back drastically on spending last month, the most since February 2021, even as inflation declined, though stiff tariffs threatened by the White House could disrupt that progress.

Americans cut their spending by 0.2% in January from the previous month, the Commerce Department said Friday, possibly because of unseasonably cold weather. Yet the retreat may be hinting at more caution by Americans amid rising economic uncertainty.

Inflation declined to 2.5% in January compared with a year earlier, down from 2.6% in December, the government said. Excluding the volatile food and energy categories, core prices dropped to 2.6%, the lowest since June, from 2.8%.

Inflation spiked in 2022 to its highest level in four decades, propelling President Donald Trump to the White House and causing the Federal Reserve to rapidly raise interest rates to tame prices.

Last month’s decline could reassure Fed officials that inflation is still slowly cooling. The Fed prefers Friday’s measure to the more widely-known consumer price index, which rose for the fifth straight month in January to 3%. Friday’s gauge calculates inflation slightly differently: For example, it puts less weight on the costs of housing and used cars.

Even so, the key question preoccupying many American consumers, investors, and business executives is whether Trump’s extensive tariff proposals will push prices higher in the coming months. Trump said Thursday he will double his recently-announced tariffs on Chinese imports to 20%, and will impose 25% import taxes on Canada and Mexico next Tuesday. The three countries are the United States’ top trading partners.

Trump is also calling for widespread layoffs of federal workers, which could cause hundreds of thousands of job losses and potentially lift the unemployment rate.

“Increased uncertainty surrounding trade, fiscal and regulatory policy is casting a shadow over the outlook,” said Lydia Boussour, a senior economist at accounting and consulting firm EY.

On a monthly basis, prices rose 0.3% in January from the previous month, matching December’s 0.3% increase. Core prices rose 0.3%, up from 0.2% in December. If sustained, January’s increases would keep inflation running above the Fed’s target. The Fed pays more attention to core prices because they provide a better read of future inflation.

A big concern right now is whether tariffs will push up inflation, or slow the economy, or — in a particularly toxic combination — both.

A report from the Federal Reserve’s Boston branch this month concluded that 25% tariffs on Canada and Mexico, along with Trump’s initial 10% import taxes on China, could lift core inflation by as much as 0.8 percentage points.

By VLADIMIR ISACHENKOV, Associated Press

MOSCOW (AP) — Russia has offered the United States to restore direct air links between the two countries during the latest round of consultations with Washington, the Russian Foreign Ministry said Friday.

Russian and U.S. diplomats met in Istanbul on Thursday to discuss normalizing the operation of their respective embassies that has been crippled by multiple round of diplomats’ expulsions during previous years.

The Russian Foreign Ministry hailed the talks as “substantive and businesslike” and noted in a statement that “joint steps were agreed upon to ensure unimpeded financing of the activities of diplomatic missions of Russia and the United States on a reciprocal basis and to create appropriate conditions for diplomats to perform their official duties.”

The ministry said that it also offered the U.S. “to consider the possibility of restoring direct air traffic.” It didn’t add any details or possible time frame, and there was no immediate comment from Washington on the issue.

U.S. and other Western nations cut air links with Russia as part of a slew of sanctions imposed on Moscow after it sent troops into Ukraine on Feb. 24, 2022.

The U.S.-Russia talks in Istanbul followed an understanding reached during U.S. President Donald Trump’s call with Russian President Vladimir Putin, and negotiations between senior Russian and U.S. diplomats and other officials in Saudi Arabia earlier this month.

In Riyadh, Moscow and Washington agreed to start working toward ending the fighting in Ukraine and improving their diplomatic and economic ties. That includes restoring staffing at embassies, which in recent years were hit hard by mutual expulsions of large numbers of diplomats, closures of offices and other restrictions.

The U.S. State Department said that during Thursday’s talks in Istanbul, the U.S. delegation “raised concerns regarding access to banking and contracted services as well as the need to ensure stable and sustainable staffing levels at the U.S. Embassy in Moscow.”

“Through constructive discussions, both sides identified concrete initial steps to stabilize bilateral mission operations in these areas,” it said in a statement.

Sonata Coulter, U.S. deputy assistant secretary of state for Russia and Central Europe who led the U.S. delegation, and Alexander Darchiyev, the head of the North America department of the Russian Foreign Ministry who headed Moscow’s team of negotiators, “agreed to hold a follow-up meeting on these issues in the near term,” the U.S. State Department said.

Putin on Thursday hailed the Trump administration’s “pragmatism and realistic view” compared with what he described as the “stereotypes and messianic ideological cliches” of its predecessors.

“The first contacts with the new U.S. administration encourage certain hopes,” Putin said. “There is a mutual readiness to work to restore relations and gradually solve a colossal amount of systemic strategic problems in the global architecture.”

By FATIMA HUSSEIN, Associated Press

WASHINGTON (AP) — The Social Security Administration is preparing to lay off at least 7,000 people from its workforce of 60,000, according to a person familiar with the agency’s plans who is not authorized to speak publicly. The workforce reduction, according to a second person who also spoke on the condition of anonymity, could be as high as 50%.

It’s unclear how the layoffs will directly impact the benefits of the 72.5 million Social Security beneficiaries, which include retirees and children who receive retirement and disability benefits. However, advocates and Democratic lawmakers warn that layoffs will reduce the agency’s ability to serve recipients in a timely manner.

Some say cuts to the workforce are, in effect, a cut in benefits.

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Later Friday, the agency sent out a news release outlining plans for “significant workforce reductions,” employee reassignments from “non-mission critical positions to mission critical direct service positions,” and an offer of voluntary separation agreements. The agency said in its letter to workers that reassignments “may be involuntary and may require retraining for new workloads.”

The layoffs are part of the Trump administration’s intensified efforts to shrink the size of the federal workforce through the Department of Government Efficiency, run by President Donald Trump’s advisor Elon Musk.

A representative from the Social Security Administration did not respond to an Associated Press request for comment.

The people familiar with the agency’s plans say that SSA’s new acting commissioner Leland Dudek held a meeting this week with management and told them they had to produce a plan that eliminated half of the workforce at SSA headquarters in Washington and at least half of the workers in regional offices.

In addition, the termination of office leases for Social Security sites across the country are detailed on the DOGE website, which maintains a “Wall of Receipts,” which is a self-described “transparent account of DOGE’s findings and actions.” The site states that leases for dozens of Social Security sites across Arkansas, Texas, Louisiana, Florida, Kentucky, North Carolina, and other states have been or will be ended.

“The Social Security Administration is already chronically understaffed. Now, the Trump Administration wants to demolish it,” said Nancy Altman, president of Social Security Works, an advocacy group for the popular public benefit program.

Altman said the reductions in force “will deny many Americans access to their hard-earned Social Security benefits. Field offices around the country will close. Wait times for the 1-800 number will soar.”

Social Security is one of the nation’s largest and most popular social programs. A January poll from The Associated Press-NORC Center for Public Affairs Research found that two-thirds of U.S. adults think the country is spending too little on Social Security.

The program faces a looming bankruptcy date if it is not addressed by Congress. The May 2024 Social Security and Medicare trustees’ report states that Social Security’s trust funds — which cover old age and disability recipients — will be unable to pay full benefits beginning in 2035. Then, Social Security would only be able to pay 83% of benefits.

Like other agencies, DOGE has embedded into the Social Security Administration as part of Trump’s January executive order, which has drawn concerns from career officials.

This month, the Social Security Administration ’s former acting commissioner Michelle King stepped down from her role at the agency after DOGE requested access to Social Security recipient information, according to two people familiar with the official’s departure who were not authorized to discuss the matter publicly.

Sen. Ron Wyden (D-Ore.) said in a statement that “a plan like this will result in field office closures that will hit seniors in rural communities the hardest.”

Other news organizations, including The American Prospect and The Washington Post, have reported that half of the Social Security Administration’s workforce could be on the chopping block.

RED WING, Minn. — Red Wing Public Schools canceled an event that Minnesota Attorney General Keith Ellison was scheduled to appear at after notifying families there were “concerns over significant disruptions.”

The event was scheduled to take place Thursday until Superintendent Bob Jaszczak informed staff and parents about the cancellation in an email. The event was scheduled in celebration of Black History Month.

“While this specific event will not move forward, our commitment to uplifting the voices and experiences of our most marginalized students remains steadfast,” Jaszczak said in his email. “Black History Month is a time to reflect, learn, and engage in meaningful dialogue, and we encourage our community to continue these important conversations in other spaces.”

The district’s communications manager, Anne Robertson, said “the email stands for itself.”

Press secretary Brian Evans said Keith Ellison’s office didn’t have a comment about the cancellation of the event.

The Red Wing Police Department said it had not received any police reports from the school district about the event’s cancellation.

The cancellation came just a day after Ellison was named in a White House memo titled “Sick politicians want killers, rapists roaming our streets.” The memo said Ellison warned local law enforcement of “liability if they enforce immigration detainers.”

Ellison’s office has become an increasingly visible buffer between Minnesota and the federal government over the last month as the Trump administration continues to roll out its initiatives.

On Feb. 20, Ellison issued a statement saying that “barring students from participating in extracurricular activities consistent with their gender identity would violate the Minnesota Human Rights Act.” On Feb. 21, his office issued another statement saying it had stopped “Elon Musk and DOGE from accessing Americans’ private information and cutting federal funds.”

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