By PAUL WISEMAN, Associated Press Economics Writer

WASHINGTON (AP) — The U.S. economy shrank at a 0.2% annual pace from January through March, the first drop in three years, as President Donald Trump’s trade wars disrupted business, the government said Thursday in a slight upgrade of its initial estimate.

First-quarter growth was brought down by a surge in imports as companies in the United States hurried to bring in foreign goods before the president imposed massive import taxes.

The January-March drop in gross domestic product — the nation’s output of goods and services — reversed a 2.4% gain in the fourth quarter of 2024. Imports grew at a 42.6% pace, fastest since third-quarter 2020, and shaved more than 5 percentage points off GDP growth. Consumer spending also slowed sharply.

And federal government spending fell at a 4.6% annual pace, the biggest drop in three years.

Trade deficits reduce GDP. But that’s mainly a matter of mathematics. GDP is supposed to count only what’s produced domestically. So imports — which the government counts as consumer spending in the GDP report when you buy, say, Costa Rican coffee — have to be subtracted out to keep them from artificially inflating domestic production.

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The first-quarter import surge likely won’t be repeated in the April-June quarter and therefore shouldn’t weigh on GDP.

From January through March, business investment surged 24.4%. An increase in inventories — as businesses stocked up ahead of the tariffs — added more than 2.6 percentage points to first-quarter GDP growth.

A category within the GDP data that measures the economy’s underlying strength rose at a 2.5% annual rate from January through March, down from 2.9% in the fourth quarter of 2024 but still solid. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.

Trump’s tariffs have added considerable uncertainty to the economic outlook. He has imposed 10% tariffs on almost every country on earth in addition to levies on steel, aluminum and autos. A federal court on Wednesday blocked the 10% tariffs as well as specific taxes on Canadian, Mexican and Chinese imports, saying the president had overstepped his authority.

Thursday’s report was the second of three Commerce Department estimates of first-quarter GDP. The final version arrives June 26.

By MICHAEL CASEY and LEAH WILLINGHAM, Associated Press

CAMBRIDGE, Mass. (AP) — Harvard University is holding its commencement Thursday at a pivotal moment, when its place as one of the world’s leading higher education institutions is under what increasingly seems like existential threats from the Trump administration.

Other schools face the loss of federal funding and their ability to enroll international students if they don’t agree to the Trump administration’s shifting demands. But Harvard, which was founded in 1636, a century and a half before the nation itself, is taking the lead on defying the White House in federal court — and paying a significant price.

The Trump administration’s latest salvos include asking federal agencies to cancel about $100 million in contracts with the Ivy League school. The government already canceled more than $2.6 billion in federal research grants, moved to cut off Harvard’s enrollment of international students and threatened its tax-exempt status.

Harvard University graduating senior Victor Flores claps while listening to a fellow student speak at a protest against President Donald Trump’s recent sanctions against Harvard in front of Science Center Plaza on Tuesday, May 27, 2025, in Cambridge, Mass. (AP Photo/Leah Willingham)

Visa interviews for international students admitted to schools nationwide were halted on Tuesday, and Trump said Wednesday that Harvard should reduce its international enrollment from 25% to about 15%.

Sustained by a $53 billion endowment, the nation’s oldest and wealthiest university is testing whether it can be a bulwark against Trump’s efforts to limit what it calls antisemitic activism on campus, which Harvard sees as an affront to the freedom to teach and learn nationwide.

The Trump administration has demanded Harvard enact broad government and leadership reforms and changes to its admissions policies. It also demanded the university audit views of diversity on campus and stop recognizing some student clubs.

Dr. Abraham Verghese, the bestselling author and Stanford expert on infectious diseases, will be the principal speaker at the university’s 374th commencement. On Wednesday, NBA Hall of Famer and activist Kareem Abdul-Jabbar was the “Class Day” speaker, and journalist Christiane Amanpour addressed graduates of Harvard’s Kennedy School.

Both praised Harvard for standing up to the Trump administration, with Abdul-Jabbar specifically calling out the actions of Harvard President Alan Garber.

“When a tyrannical administration tried to bully and threaten Harvard, to revoke their academic freedom and to destroy free speech, Dr. Alan Garber rejected the illegal and immoral pressures,” Abdul-Jabbar said to wide applause as he compared Garber’s response to Rosa Parks’ stand against racist segregation.

Ryan Enos, a government professor at Harvard University, speaks at a protest against President Donald Trump’s recent sanctions against Harvard in front of Science Center Plaza on Tuesday, May 27, 2025, in Cambridge, Mass. (AP Photo/Leah Willingham)

“After seeing so many cowering billionaires, media moguls, law firms, politicians and other universities bend their knee to an administration that is systematically strip-mining the U.S. Constitution, it is inspiring to me to see Harvard University take a stand for freedom,” he continued.

In response to the administration’s threats, Harvard has sued to block the funding freeze and persuaded a federal judge to temporarily halt the enrollment ban. It is going to court in Boston on Thursday just as the commencement is wrapping up, hoping for a ruling that allows it to continue enrolling international students.

“We believe that the government overreach and devastating attacks on scientific and medical research are unwarranted and unlawful, and so we have taken legal action to defend the institution,” Garber said in an interview with a university publication.

“We should all be concerned that colleges and universities have increasingly come under attack. But we should not dismiss the criticisms even when they are based on distortions or inaccuracies — we need to look for the underlying concerns that can be embedded in them,” said Garber, who commissioned internal reports last year on antisemitism and anti-Arab prejudice at the Ivy League campus.

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The Trump administration has said it wants “to protect American students and faculty from antisemitic violence and harassment.” It cites campus protests against Israel. Like many college students around the country, Harvard students set up tents called on the university to divest from companies supporting Israel’s military, which has leveled Gaza in response to attacks by Hamas.

Last year, hundreds of graduating students walked out of commencement chanting “Free, free Palestine” after weeks of campus protests. Harvard also said some protesters would not receive diplomas alongside their classmates, although it eventually allowed most to get them.

This year, the anti-war demonstrations have largely faded from view, but protesters plan a silent vigil before Thursday’s ceremony.

“As a graduate of Harvard, I am horrified by Israel’s mass murder of Palestinians (including by deliberate starvation), its total leveling of Gaza, its targeting of hospitals, its assaults on Palestinian educational and cultural institutions, and its relentless killings of journalists,” Harvard graduate Victor Wallis explained in a statement.

By MATT OTT, Associated Press Business Writer

WASHINGTON (AP) — Filings for U.S. jobless aid jumped last week but American workers broadly remain secure in their jobs despite economic uncertainty over global trade.

Jobless benefits applications rose by 14,000 to 240,000 for the week ending May 24, the Labor Department said Thursday. Analysts had forecast 226,000 new applications.

Weekly applications for jobless benefits are seen as representative of U.S. layoffs and have mostly settled in a historically healthy range between 200,000 and 250,000 since COVID-19 throttled the economy in the spring of 2020, wiping out millions of jobs.

A sense of relief swept over financial markets early Thursday after a federal court blocked President Donald Trump from imposing sweeping tariffs on imports under an emergency-powers law. Wednesday’s decision threw into doubt Trump’s signature economic policy that has rattled global financial markets, frustrated trade partners and raised fears about inflation intensifying and the economy slumping.

The Trump administration quickly filed notice of appeal and the Supreme Court will almost certainly be called upon to decide the issue. It remains unclear whether the White House will respond to the ruling by pausing all of its emergency power tariffs in the interim.

Trump had already paused or dialed down many of his tariff threats, but concerns lingered about a global economic slowdown upending a robust U.S. labor market.

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In early May, the Federal Reserve held its benchmark lending rate at 4.3% for the third straight meeting after cutting it three times at the end of last year.

Fed chair Jerome Powell said the potential for both higher unemployment and inflation are elevated, an unusual combination that complicates the central bank’s dual mandate of controlling prices and keeping unemployment low. Powell said that tariffs have dampened consumer and business sentiment.

The government reported Thursday that the U.S. economy shrank at a 0.2% annual pace in the first quarter of 2025, a slight upgrade from its first estimate. Growth was slowed by a surge in imports as companies in the U.S. tried to bring in foreign goods before Trump’s massive tariffs went into effect.

Trump is attempting to reshape the global economy by dramatically increasing import taxes to rejuvenate the U.S. manufacturing sector.

Trump has also tried to drastically downsize the federal government workforce, but many of those cuts are being challenged in the courts and Congress.

Despite showing traces of weakness during the past year, the labor market remains robust, with plentiful jobs and relatively few layoffs.

The government reported that U.S. employers added a surprisingly strong 177,000 jobs in April and the unemployment rate held at a healthy 4.2%.

Companies that have announced job cuts this year include Workday, Dow, CNN, Starbucks, Southwest Airlines, Microsoft and Facebook parent company Meta.

Labor reported Thursday that the four-week average of jobless claims, which evens out some of the week-to-week ups and downs during more volatile stretches, ticked down by 250 to 230,750.

The total number of Americans receiving unemployment benefits for the week of May 17 increased by 26,000 to 1.92 million.

By MAE ANDERSON and PAUL HARLOFF, Associated Press Business Writers

NEW YORK (AP) — The typical compensation package for chief executives who run companies in the S&P 500 jumped nearly 10% in 2024 as the stock market enjoyed another banner year and corporate profits rose sharply.

Many companies have heeded calls from shareholders to tie CEO compensation more closely to performance. As a result, a large proportion of pay packages consist of stock awards, which the CEO often can’t cash in for years, if at all, unless the company meets certain targets, typically a higher stock price or market value or improved operating profits.

The Associated Press’ CEO compensation survey, which uses data analyzed for The AP by Equilar, included pay data for 344 executives at S&P 500 companies who have served at least two full consecutive fiscal years at their companies, which filed proxy statements between Jan. 1 and April 30.

Here are the key takeaways from the survey:

A good year at the top

The median pay package for CEOs rose to $17.1 million, up 9.7%. Meanwhile, the median employee at companies in the survey earned $85,419, reflecting a 1.7% increase year over year.

CEOs had to navigate sticky inflation and relatively high interest rates last year, as well as declining consumer confidence. But the economy also provided some tail winds: Consumers kept spending despite their misgivings about the economy; inflation did subside somewhat; the Fed lowered interest rates; and the job market stayed strong.

FILE – Tim Cook attends the WSJ. Magazine Innovators Awards at the Museum of Modern Art on Tuesday, Oct. 29, 2024, in New York. (Photo by Evan Agostini/Invision/AP, File)

The stock market’s main benchmark, the S&P 500, rose more than 23% last year. Profits for companies in the index rose more than 9%.

“2024 was expected to be a strong year, so the (nearly) 10% increases are commensurate with the timing of the pay decisions,” said Dan Laddin, a partner at Compensation Advisory Partners.

Sarah Anderson, who directs the Global Economy Project at the progressive Institute for Policy Studies, said there have been some recent “long-overdue” increases in worker pay, especially for those at the bottom of the wage scale. But she said too many workers in the world’s richest countries still struggle to pay their bills.

The top earners

Rick Smith, the founder and CEO of Axon Enterprises, topped the survey with a pay package valued at $164.5 million. Axon, which makes Taser stun guns and body cameras, saw revenue grow more than 30% for three straight years and posted record annual net income of $377 million in 2024. Axon’s shares more than doubled last year after rising more than 50% in 2023.

Almost all of Smith’s pay package consists of stock awards, which he can only receive if the company meets targets tied to its stock price and operations for the period from 2024 to 2030. Companies are required to assign a value to the stock awards when they are granted.

Other top earners in the survey include Lawrence Culp, CEO of what is now GE Aerospac e ($87.4 million), Tim Cook at Apple ($74.6 million), David Gitlin at Carrier Global ($65.6 million) and Ted Sarandos at Netflix ($61.9 million). The bulk of those pay packages consisted of stock or options awards.

FILE – General Electric Co. CEO Lawrence Culp Jr. signs a $52 billion deal by Emirates to purchase Boeing aircraft with GE engines, at the Dubai Air Show, in Dubai, United Arab Emirates, Monday, Nov. 13, 2023. (AP Photo/Lujain Jo)

The median stock award rose almost 15% last year compared to a 4% increase in base salaries, according to Equilar.

“For CEOs, target long-term incentives consistently increase more each year than salaries or bonuses,” said Melissa Burek, also a partner at Compensation Advisory Partners. “Given the significant role that long-term incentives play in executive pay, this trend makes sense.”

Jackie Cook at Morningstar Sustainalytics said the benefit of tying CEO pay to performance is “that share-based pay appears to provide a clear market signal that most shareholders care about.” But she notes that the greater use of share-based pay has led to a “phenomenal rise” in CEO compensation “tracking recent years’ market performance,” which has “widened the pay gap within workplaces.”

Some well-known billionaire CEOs are low in the AP survey. Warren Buffett’s compensation was valued at $405,000, about five times what a worker at Berkshire Hathaway makes. According to Tesla’s proxy, Elon Musk received no compensation for 2024, but in 2018 he was awarded a multiyear package that has been valued at $56 billion and is the subject of a court battle.

Other notable CEOs didn’t meet the criteria for inclusion the survey. Starbucks’ Brian Niccol received a pay package valued at $95.8 million, but he only took over as CEO on Sept. 9. Nvidia’s Jensen Huang saw his compensation grow to $49.9 million, but the company filed its proxy after April 30.

The pay gap

At half the companies in AP’s annual pay survey, it would take the worker at the middle of the company’s pay scale 192 years to make what the CEO did in one. Companies have been required to disclose this so-called pay ratio since 2018.

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The pay ratio tends to be highest at companies in industries where wages are typically low. For instance, at cruise line company Carnival Corp., its CEO earned nearly 1,300 times the median pay of $16,900 for its workers. McDonald’s CEO makes about 1,000 times what a worker making the company’s median pay does. Both companies have operations that span numerous countries.

Overall, wages and benefits netted by private-sector workers in the U.S. rose 3.6% through 2024, according to the Labor Department. The average worker in the U.S. makes $65,460 a year. That figure rises to $92,000 when benefits such as health care and other insurance are included.

“With CEO pay continuing to climb, we still have an enormous problem with excessive pay gaps,” Anderson said. “These huge disparities are not only unfair to lower-level workers who are making significant contributions to company value – they also undercut enterprise effectiveness by lowering employee morale and boosting turnover rates.”

Some gains for female CEOs

For the 27 women who made the AP survey — the highest number dating back to 2014 — median pay rose 10.7% to $20 million. That compares to a 9.7% increase to $16.8 million for their male counterparts.

The highest earner among female CEOs was Judith Marks of Otis Worldwide, with a pay package valued at $42.1 million. The company, known for its elevators and escalators, has had operating profit above $2 billion for four straight years. About $35 million of Marks’ compensations was in the form of stock awards.

This photo provided by Otis Elevator Co. shows CEO Judy Marks. (via AP)

Other top earners among female CEOs were Jane Fraser of Citigroup ($31.1 million), Lisa Su of Advanced Micro Devices ($31 million), Mary Barra at General Motors ($29.5 million) and Laura Alber at Williams-Sonoma ($27.7 million).

Christy Glass, a professor of sociology at Utah State University who studies equity, inclusion and leadership, said while there may be a few more women on the top paid CEO list, overall equity trends are stagnating, particularly as companies cut back on DEI programs.

“There are maybe a couple more names on the list, but we’re really not moving the needle significantly,” she said.

Prioritizing security

Equilar found that a larger number of companies are offering security perquisites as part of executive compensation packages, possibly in reaction to the December shooting of UnitedHealthCare CEO Brian Thompson.

Equilar said an analysis of 208 companies in the S&P 500 that filed proxy statements by April 2 showed that the median spending on security rose to $94,276 last year from $69,180 in 2023.

Among the companies that increased their security perks were Centene, which provides health care services to Medicare and Medicaid, and the chipmaker Intel.

Reporters Matt Ott and Chris Rugaber in Washington contributed.