US consumer sentiment slides to 3-year lows as trade war raises inflation anxiety

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By CHRISTOPHER RUGABER

WASHINGTON (AP) — U.S. consumer sentiment fell slightly in May for the fifth straight month, surprising economists, as Americans increasingly worry that President Donald Trump’s trade war will worsen inflation.

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The preliminary reading of the University of Michigan’s closely watched consumer sentiment index, released Friday, declined 2.7% on a monthly basis to 50.8, the second-lowest level in the nearly 75-year history of the survey. The only lower reading was in June 2022. Since January, sentiment has tumbled nearly 30%.

Americans have largely taken a sour view about where the economy is headed in the wake of the Trump administration’s imposition of huge import duties, which threaten to slow growth and push up prices. In recent weeks the White House has pulled back on its most draconian policies, though average duties are still high by historical standards.

Consumers’ outlooks are also sharply divided by their political views, which has caused some economists to question the survey’s results. The University of Michigan also last year switched from using both online and phone responses to just online, which some analysts worry may have introduced a more negative bias.

The sentiment index for Democrats fell to 33.9 this month, the lowest since partisan data began in 1980 and far below the levels reached in the depths of the COVID pandemic or during the 2008-2009 Great Recession.

For Republicans, it’s 84.2, though that slipped from 90.2 in April and is the lowest since Trump’s election.

Inflation eased slightly in April. (AP Digital Embed)

Trump had slapped 145% tariffs on all imports from China, a move that effectively suspended trade with the United States’ third-largest trading partner in goods. But on Monday, the two countries said they had reached a deal that would lower U.S. tariffs to 30%, while China would cut its duties on U.S. exports to 10% from 125%.

The survey was taken between April 22 and May 13, which includes just two days after the China tariffs were reduced.

Yet on Thursday Walmart said it had started to lift prices in response to the tariffs and will do so even more in June and July just as families gear up the back-to-school season. The company counts 90% of the U.S. population as customers and price hikes at the nation’s largest retailer may start to sink in with Americans who have already been buffeted by post-pandemic inflation.

The survey found consumers are increasingly worried about rising inflation. Over the next 12 months, consumers expect inflation to jump to 7.3%, the highest since 1981 and up from an expectation of 6.5% last month. Over the next five years, they foresee inflation reaching 4.6%, the highest since 1991, up from 4.4% last month.

Those expectations typically run higher than actual inflation, which last month ticked down to 2.3%, the lowest level in more than four years. Still, economists and the Federal Reserve closely watch inflation expectations, because they can become self-fulfilling. If people are worried inflation will accelerate, they may take steps, such as demanding higher pay, that can push up prices.

Federal Reserve Chair Jerome Powell has said the Michigan inflation expectation numbers are an “outlier.” Market-based measures of future inflation, which some Fed officials put greater weight on, have remained mostly stable. Still, the steady rise in the Michigan survey’s inflation expectations could make it less likely the Fed will cut its key interest rate anytime soon.

Fortnite says its now offline on Apple’s iOS around the world

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By WYATTE GRANTHAM-PHILIPS and MICHAEL LIEDTKE, Associated Press

NEW YORK (AP) — Fortnite says it’s now unavailable on Apple’s iOS globally because the tech giant blocked a bid to release the popular video game for iPhone users in the U.S. and Europe.

“Apple has blocked our Fortnite submission so we cannot release to the U.S. App Store or to the Epic Games Store for iOS in the European Union,” Epic Games-owned Fortnite wrote on X, the platform formerly known as Twitter, early Friday — claiming that Apple’s move would now prevent the game’s iOS availability around the world.

“Sadly, Fortnite on iOS will be offline worldwide until Apple unblocks it,” Fortnite said.

In a statement sent to The Associated Press, Apple said it had specifically asked Epic Sweden to resubmit the app update “without including the U.S. storefront of the App Store so as not to impact Fortnite in other geographies.” But, the company added, it “did not take any action to remove the live version of Fortnite from alternative distribution marketplaces.”

Fortnite’s exile from the iPhone app store is the latest twist in a yearslong feud between Apple and Epic. Back in 2020, the video game maker filed an antitrust lawsuit against Apple in the U.S., alleging the technology trendsetter was illegally using its power to gouge game makers.

After a monthlong trial in 2021, U.S. District Judge Yvonne Gonzalez Rogers ruled against most of Epic’s claims, but ordered Apple to loosen its previously-exclusive control over the payments made for in-app commerce and allow links to alternative options in the U.S. for the first time — threatening to undercut sizeable commissions that Apple had been collecting from in-app transactions for over a decade.

After exhausting an appeal that went all the way to the U.S. Supreme Court, Apple last year introduced a new system that opened the door for links to alternative payment options while still imposing a 27% commission on in-app transactions executed outside its own system.

Epic fired back by alleging Apple was thumbing its nose at the legal system, reviving another round of court hearings that lasted nearly a year before Gonzalez Rogers delivered a stinging rebuke last month — which held Apple in civil contempt and banned the company from collecting any commission on alternative payment systems.

That ruling cleared the way for Epic to finally return to the iPhone app store in the U.S., a reinstatement the video game maker was anticipating before Apple’s latest move.

Fortnite’s availability in the EU, meanwhile, was set to go in an alternative store for iPhone users — now called the Epic Games Store. Apple last year cleared the way for this last year under new regulatory pressures.

Liedtke reported from San Francisco.

Trump administration must resume $11 billion in funding for public health departments, judge rules

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By DEVNA BOSE, Associated Press Health Writer

President Donald Trump’s administration must put the brakes on slashing billions in federal money for public health departments, a federal judge said Friday.

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U.S. District Judge Mary McElroy in Rhode Island granted the preliminary injunction request in the lawsuit brought last by a coalition of Democrat-led states. She had granted a temporary restraining order last month in the case.

The lawsuit filed April 1 by 23 states and the District of Columbia sought to immediately halt $11 billion in cuts, alleging that it would decimate public health infrastructure across the country. The money, allocated by Congress during the pandemic, supported COVID-19 initiatives and mental health and substance abuse efforts.

The injunction only applies to the states involved in the lawsuit. The federal government must file documentation that they’re complying with the order by Tuesday evening.

Health departments across the country have said they’ve laid off employees after the Trump administration began to clawback the money in late March.

The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group and the Robert Wood Johnson Foundation. The AP is solely responsible for all content.

Watching Trump from afar, Israel fears being left out of a new Middle East it helped create

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By JOSEPH KRAUSS, Associated Press

As U.S. President Donald Trump jetted from one sprawling palace to another, embracing Arab leaders and heralding a new Middle East this week, many in Israel worried that the best partner they’ve ever had in the White House had lost interest.

For decades, Israel has leveraged its special relationship with the United States to serve as a gatekeeper to Washington. From the Camp David Treaty with Egypt to the Abraham Accords brokered by Trump in his first term, Arab states seeking U.S. favor usually had to first make nice with Israel. And rarely did their interests prevail if they clashed with Israel’s.

But on Wednesday, to Israel’s dismay, Saudi Arabia and Turkey brokered a historic meeting between Trump and Syria’s new president, and Trump portrayed his decision to lift sanctions on Damascus as a favor to his host, Saudi Crown Prince Mohammed bin Salman, and Turkish President Recep Tayyip Erdogan.

Israel, which still views Syria as a security threat and had urged Trump to keep the sanctions in place, was ignored, as it apparently was on a number of recent U.S. initiatives in the region, from the ongoing talks with Iran to the ceasefire with Yemen’s Houthi rebels. Asked Friday if he knew Israel opposes U.S. recognition of Syria’s new government, Trump replied: “I don’t know, I didn’t ask them about that.”

“This week there was a party in the Middle East — a grand ball full of colorful costumes, money and gold changing hands — and we found ourselves playing the role of Cinderella before the transformation,” columnist Sima Kadmon wrote in Israel’s Yediot Ahronot daily.

“The fairy godmother we thought we had flew off to Saudi Arabia and Qatar.”

Israel sidelined

Trump skipped Israel on his first major foreign tour, which instead took him to Saudi Arabia, Qatar and the United Arab Emirates.

Israel was also left out of a deal with Hamas to free an American hostage from Gaza, where Israel is trying to destroy the militant group. Trump reached a separate truce with Yemen’s Houthi rebels that has allowed them to train their fire on Israel, and is holding talks with Iran on its nuclear program that could bring about another deal that Israel rejects.

There have been no open clashes between Trump and Israeli Prime Minister Benjamin Netanyahu, both of whom say relations have never been better. Trump has yet to scold Israel, at least in public, as former President Joe Biden occasionally did, over civilian deaths in the Gaza Strip.

But compared to Trump’s first term, when he upended decades of U.S. foreign policy to lend unprecedented support to Israel, something has changed.

A focus on quick wins

This time around, Trump seems to be hunting for quick wins — big investment deals to boost the American economy and diplomatic agreements like the India-Pakistan ceasefire and the release of hostages.

In that respect, Netanyahu has little to offer.

Israel’s 19-month military campaign in Gaza has killed tens of thousands of Palestinians and reduced entire towns to rubble but has yet to achieve either of Netanyahu’s war aims — the defeat of Hamas and the return of all the hostages taken in the Oct. 7, 2023, terrorist attack that ignited the war.

Netanyahu has refused to end the war in exchange for the release of the remaining hostages, or to accept a pathway to Palestinian statehood — key Saudi demands for the kind of historic normalization accord that Trump has long sought.

“Trump has given Israel many opportunities, and ammunition prohibited by the Biden administration, to end the war in Gaza. This is what Trump wants,” said Eytan Gilboa, an expert on U.S.-Israeli relations at Israel’s Bar-Ilan and Reichman universities. Instead, the war is intensifying.

“Netanyahu is coming closer to the status of a loser in Trump’s eyes,” Gilboa said.

Trump denies rift and few expect pressure over Gaza

Trump has downplayed any rift, telling reporters on the tour that his relationships with regional leaders are “good for Israel.”

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The irony is that Israel is being excluded from a regional realignment that it largely created, by inflicting punishing losses on Iran and its allies after the Oct. 7 attack. Its thrashing of Hezbollah in Lebanon hastened the downfall of Syrian President Bashar Assad, and Iran may be more open to concessions on its nuclear program after a wave of Israeli retaliatory strikes last year.

Michael Oren, a historian and former Israeli ambassador to the U.S., said there is at least one precedent for Trump’s approach.

“It’s going to drive the people in Washington crazy, but it most closely resembles the Obama administration,” he said.

On Barack Obama’s first visit as president to the Middle East, he too skipped Israel. Oren, a critic of that administration who was Israel’s envoy to the U.S. at the time, said Obama repeatedly violated an unspoken rule of U.S.-Israeli relations — that there be no surprises. That led to public spats with Netanyahu, especially around the 2015 Iranian nuclear deal.

Few expect a repeat under Trump — or that he will publicly press Israel to wind down the war in Gaza, despite the humanitarian catastrophe unleashed by its war and blockade.

Trump has said the days of the United States giving “lectures” to Middle Eastern countries are over — that decades of American intervention have done more harm than good.

And the Israeli-Palestinian conflict is the last place any American president would look for a quick win.

“He’s not looking for a fight with Israel,” Oren said. “He wants to end the war, but the war can end in different ways.”