By PAUL WISEMAN, Associated Press Economics Writer

WASHINGTON (AP) — The American economy grew at a solid 2.3% annual rate the last three months of 2024, supported by a burst of year-end consumer spending, the government said, leaving unchanged its initial estimate of fourth-quarter growth.

The outlook for 2025 is cloudier as President Donald Trump pursues trade wars, cutbacks in the federal workforce and mass deportations.

The Commerce Department reported Thursday that growth in gross domestic product — the nation’s output of goods and services — decelerated from a 3.1% pace in July-September 2024.

For all of last year, the economy grew 2.8%, compared with 2.9% in 2023.

Consumer spending advanced at a 4.2% pace from October through December.

The report shows that Trump inherited a healthy economy when he took office last month. Growth has now topped a decent 2% for nine of the last 10 quarters. Unemployment is low at 4%, and inflation has come down from the highs it hit in mid-2022.

After lowering its benchmark interest rate three times in the last four months of 2024, the Federal Reserve left it unchanged in January and appears to be in no hurry to start cutting again. Progress against inflation has stalled in recent months. At 3% in January, the year-over-year increase in consumer prices is down sharply 9.1% in June 2022 but remains stuck above the Fed’s 2% target.

President Donald Trump’s plans to impose tax imports at a scale not seen since the 1930s risks raising prices and intensifying inflationary pressure. Deporting millions of immigrants working in the country illegally, as Trump has promised, could also create labor shortages that push up wages and feed inflation.

Thursday’s GDP report was the second of three Commerce Department looks at fourth-quarter economic growth. The final estimate comes out March 27.

By MATT OTT, Associated Press Business Writer

Applications for U.S. jobless benefits rose to a three-month high last week but remained within the same healthy range of the past three years.

The number of Americans filing for jobless benefits rose by 22,000 to 242,000 for the week ending Feb. 22, the Labor Department said Thursday. Analysts projected that 220,000 new applications would be filed.

Weekly applications for jobless benefits are considered a proxy for layoffs.

The four-week average, which evens out some of the week-to-week volatility, climbed by 8,500 to 224,000.

Some analysts say they expect layoffs ordered by the Department of Government Efficiency to show up in the report in the coming weeks.

On Wednesday, senior U.S. officials set the government downsizing in motion via a memo dramatically expanding President Donald Trump’s efforts to scale back a workforce. Thousands of probationary employees have already been fired, and now the Republican administration is turning its attention to career officials with civil service protection.

Government agencies have been directed to submit by March 13 their plans for what is known as a reduction in force, which would not only lay off employees but eliminate positions altogether.

Despite showing some signs of weakening during the past year, the labor market remains healthy with plentiful jobs and relatively few layoffs.

Earlier this month, the Labor Department reported that U.S. employers added 143,000 jobs in January, significantly fewer than December’s 256,000 job gains. However, the unemployment rate ticked down to an even 4%, signaling a still very healthy labor market.

Late in January, the Federal Reserve left its benchmark lending rate alone after issuing three cuts late in 2024. Fed officials are closely monitoring inflation and the labor market for signs of a potentially weakening economy. They expect only two rate cuts this year, down from previous projections of four.

The most recent government consumer prices report that showed that inflation accelerated last month, creating some doubt about whether the Fed will be moved to cut rates at all this year.

The consumer price index increased 3% in January from a year ago, up from a 3 1/2 year low of 2.4% in September. The new data shows that inflation has remained stubbornly above the Fed’s 2% target for roughly the past six months after it fell steadily for about a year and a half.

Overall, while layoffs remain low by historical standards, some high-profile companies have announced job cuts already this year.

Workday, Dow, CNN, Starbucks, Southwest Airlines and Facebook parent company Meta have all trimmed their workforces already in 2025.

Late in 2024, GM, Boeing, Cargill and Stellantis announced layoffs.

The total number of Americans receiving unemployment benefits for the week of Feb. 15 fell by 5,000 to 1.86 million.

By GARY FIELDS, Associated Press

WASHINGTON (AP) — Thousands of U.S. Agency for International Development workers who have been fired or placed on leave as part of the Trump administration’s dismantling of the agency are being given a brief window Thursday and Friday to clear out their workspaces.

USAID placed 4,080 staffers who work across the globe on leave Monday. That was joined by a “reduction in force” that will affect another 1,600 employees, a State Department spokesman said in an emailed response to questions.

USAID has been one of the biggest targets so far of a broad campaign by President Donald Trump and the Department of Government Efficiency, a project of Trump adviser Elon Musk, to slash the size of the federal government. The actions at USAID leave only a small fraction of its employees on the job.

Retired United States Agency for International Development worker Julie Hanson Swanson, left, join supporters of USAID workers outside the USAID’s Bureau of Humanitarian affairs office in Washington, Friday, Feb. 21, 2025. (AP Photo/Manuel Balce Ceneta)

Trump and Musk have moved swiftly to shutter the foreign aid agency, calling its programs out of line with the Republican president’s agenda and asserting without evidence that its work is wasteful. In addition to its scope, their effort is extraordinary because it has not involved Congress, which authorized the agency and has provided its funding.

A report from the Congressional Research Service earlier this month said congressional authorization is required “to abolish, move, or consolidate USAID,” but the Republican majorities in the House and the Senate have made no pushback against the administration’s actions. There’s virtually nothing left to fund, anyway: The administration now says it is eliminating more than 90% of USAID’s foreign aid contracts and $60 billion in U.S. assistance around the world.

It’s unclear how many of the more than 5,600 USAID employees who have been fired or placed on leave work at the agency’s headquarters building in Washington. A notice on the agency’s website said staff at other locations will have the chance to collect their personal belongings at a later date.

The notice laid out instructions for when specific groups of employees should arrive to be screened by security and escorted to their former workspaces. Those being let go must turn in all USAID-issued assets. Workers on administrative leave were told to retain their USAID-issued materials, including diplomatic passports, “until such time that they are separated from the agency.”

Many USAID workers saw the administration’s terms for retrieving their belongings as insulting. In the notice, the employees were instructed not to bring weapons, including firearms, “spear guns” and “hand grenades.” Each worker is being given just 15 minutes at their former workstation.

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The administration’s efforts to slash the federal government are embroiled in various lawsuits, but court challenges to temporarily halt the shutdown of USAID have been unsuccessful.

However, a federal judge on Tuesday gave the Trump administration a deadline of this week to release billions of dollars in U.S. foreign aid, saying it had given no sign of complying with his nearly two-week-old court order to ease the funding freeze. Late Wednesday, the Supreme Court temporarily blocked that order, with Chief Justice John Roberts saying it will remain on hold until the high court has a chance to weigh in more fully.

That court action resulted from a lawsuit filed by nonprofit organizations over the cutoff of foreign assistance through USAID and the State Department. Trump froze the money through an executive order on his first day in office that targeted what he portrayed as wasteful programs that do not correspond to his foreign policy goals.

Virginia Democratic Rep. Gerald Connolly said in a statement that the attack on USAID employees was “unwarranted and unprecedented.” Connolly, whose district includes a sizable federal workforce, called the aid agency workers part of the “world’s premier development and foreign assistance agency” who save “millions of lives every year.”

By COLLIN BINKLEY, JOCELYN GECKER and CHEYANNE MUMPHREY, Associated Press Education Writers

WASHINGTON (AP) — Schools and colleges across the U.S. face a Friday deadline to end diversity programs or risk having their federal money pulled by the Trump administration, yet few are openly rushing to make changes. Many believe they’re on solid legal ground, and they know it would be all but unprecedented — and extremely time-consuming — for the government to cut off funding.

State officials in Washington and California urged schools not to make changes, saying it doesn’t change federal law and doesn’t require any action. New York City schools have taken the same approach and said district policies and curriculum have not changed.

Leaders of some colleges shrugged the memo off entirely. Antioch University ’s chief said “most of higher education” won’t comply with the memo unless federal law is changed. Western Michigan University’s president told his campus to “please proceed as usual.”

A memo issued Feb. 14 by President Donald Trump’s administration, formally known as a Dear Colleague Letter, gave schools two weeks to halt any practice that treats people differently because of their race.

Opponents say it’s an overreach meant to have a chilling effect. The guidance appears to forbid everything from classroom lessons on racism to colleges’ efforts to recruit in diverse areas, and even voluntary student groups like Black student unions.

Education organizations have been urging a measured approach, warning institutions not to make any hasty cuts that would be difficult to undo. Ted Mitchell, president of the American Council on Education, is telling colleges that if they were in compliance with federal law before the memo, they still are.

“There’s nothing to act on until we see the administration or its agencies try to stop something,” Mitchell said. “And then we’ll have the argument.”

Investigations rarely come close to cutting schools’ federal funding

A loss of federal money would be devastating for schools and colleges, but imposing that penalty would not be quick or simple.

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The Education Department office that conducts civil rights investigations had fewer than 600 employees last year — before the Trump administration began cutting staff — while the U.S. has more than 18,000 school districts and 6,000 colleges.

Even when a school or state faces an investigation, it can take years to terminate funding. Under former President Joe Biden, the Education Department tried to pull federal money from Michigan’s education agency after finding it violated the rights of students with disabilities. The investigation began in 2022 and is still tied up in federal court.

“I hope very much that schools charged with providing inclusive, equal education to every student in their school community will stand for that principle,” said Catherine Lhamon, who led the department’s Office for Civil Rights under Biden.

Still, some education leaders say resistance is too risky. At the University of Cincinnati, President Neville G. Pinto said officials are evaluating jobs related to diversity, equity and inclusion, and removing DEI references from school websites.

“Given this new landscape, Ohio public and federally supported institutions like ours have little choice but to follow the laws that govern us,” Pinto wrote.

Tony Frank, chancellor of the Colorado State University system, wrote in a campus letter that he weighed taking a stand against the department. But he advised the system’s campuses to comply, saying there’s too much at stake for students and staff. “If we gamble here and are wrong, someone else will pay the price,” he wrote.

New guidance brings a shift in interpretation of nondiscrimination laws

In many Republican-led states, education chiefs applauded the memo.

“We never felt it was appropriate to use race in making these types of decisions in the first case, so I do not foresee any interruptions in our day-to-day business,” Alabama’s state superintendent, Eric G. Mackey, said in a statement released by the Trump administration.

The memo said schools have promoted DEI efforts often at the expense of white and Asian American students.

It doesn’t carry the weight of law but explains how the new administration will interpret nondiscrimination laws. It dramatically expands a 2023 Supreme Court decision barring the use of race in college admissions to all aspects of education — including, hiring, promotion, scholarships, housing, graduation ceremonies and campus life.

The guidance is being challenged in court by the American Federation of Teachers, which said the memo violates free speech laws.

While some schools are keeping quiet out of fear of being targeted, many leaders also are still struggling to grasp the implications.

“We are looking to our attorney general for guidance because it’s very confusing,” said Christine Tucci Osorio, superintendent of the North St. Paul School District in Minnesota. When a teacher asked if their school could still mark African American History Month, she assured them they could.

Despite concerns that schools would rush to comply, it appears “cooler heads are largely prevailing,” said Liz King, senior director for the education equity program at the Leadership Conference on Civil and Human Rights.

“Once a school sends the message that they are not going to stand up for a member, a community within their school, that is broken trust, that is a lost relationship,” King said.

Like no president before him, Trump wields funding threat to support his agenda

Trump has vowed to use education funding as political leverage on several fronts, threatening cuts for schools that do not get in line with his agenda on topics including transgender girls’ participation in girls’ sports and instruction related to race.

Usually, civil rights investigations by the Education Department take at least six months and often much longer. If a school is found in violation of federal law, department policy offers a chance to come into compliance and sign a resolution — typically a 90-day process.

Only if a school refuses to comply can the department move to revoke federal money. That can be done in the Education Department through a court-like process decided by an administrative law judge. If the judge decides the penalty is justified, the school can appeal it to the education secretary and, after that, challenge it in court.

Instead of handling it internally, the department can also refer cases to the Justice Department for prosecution. That route is no faster.

The last time the Education Department was granted approval to cut federal funding was in 1992, against the Capistrano Unified School District in California, which was found to have retaliated against a teacher for filing sex discrimination complaints.

Before the penalty was carried out, the district reinstated the teacher and effectively ended the case. It never lost any money.

Gecker reported from San Francisco, and Mumphrey from Phoenix.

The Associated Press’ education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.