(NEW YORK) -- A global pandemic that put millions of Americans out of work within days. The highest inflation in four decades. An unprecedented federal criminal investigation.

Fed Chair Jerome Powell faced a succession of crises over his 8-year tenure atop the central bank, which ends on Friday. Powell’s decisions along the way held stakes as concrete as the budgets of everyday Americans and as heady as the political independence of a pillar institution.

President Donald Trump’s Fed Chair nominee Kevin Warsh is set to take the helm, inheriting a resilient economy by some measures, though one suffering from a renewed bout of inflation.

Powell said last month that he would take the unusual step of staying on at the central bank's 12-person board of governors after his term expires. The move grants Powell a role in interest-rate policy that could last until 2028, though he says he will step down once a Fed inspector general's investigation into a renovation of the central bank headquarters is closed.

The transition offers an opportunity to look back at Powell’s tenure, which spanned two presidents, three Treasury secretaries and 66 interest-rate decisions.

"You don't choose your challenges, but you do choose how you respond," Claudia Sahm, chief economist at New Century Advisors and a former Fed official, told ABC News. "In the end, Powell's legacy will be judged by those outcomes."

When Trump nominated Powell to become Fed chair, Trump described him as a "consensus builder" who "understands what it takes for our economy to grow."

Powell, a former investment banker and Treasury official under President George H.W. Bush, assumed the role in 2018. At the time, the economy was humming, the unemployment rate clocked in at a historically low level and inflation stood just a tick above the Fed’s target rate of 2%.

Powell hiked interest rates four times in his first year, putting strain on the stock market but leaving the Fed in position to stimulate the economy with rate cuts in the event of a slowdown. Policymakers wouldn’t have to wait long.

In the early months of 2020, the COVID-19 pandemic put tens of millions of Americans into lockdown, halting business across industries like restaurants and hospitality, while putting a large swathe of the labor force out of work.

At an emergency meeting in March 2020, Powell slashed interest rates to near-zero levels in an effort to stimulate a battered economy.

“Families, businesses, schools, organizations, and governments at all levels are taking steps to protect people’s health. These measures, which are essential for containing the outbreak, will nonetheless understandably take a toll on economic activity in the near term,” Powell told reporters at the time.

The unemployment rate soared from 4.4% in March to 14.7% in April, U.S. Bureau of Labor Statistics data showed.

To supercharge the recovery, Trump and President Joe Biden enacted economic stimulus meant to support people who'd lost their jobs or faced other hardship. Alongside low interest rates, that spending helped bring about a speedy economic recovery from the downturn.

The COVID-19 recession lasted only two months, making it the shortest in U.S. history, according to the National Bureau of Economic Research.

The speedy recovery vindicated the Fed's decision to slash interest rates, though it hadn’t been a particularly difficult choice, Alan Blinder, a professor of economics at Princeton University and former vice chairman of the Federal Reserve, told ABC News.

“The dropping of rates to the floor was both necessary and appropriate, and in a real sense, obvious,” Blinder said.

A bout of acute inflation soon took hold, however, emerging as a result of a supply shortage imposed by the COVID-19 pandemic and exacerbated by the Russia-Ukraine war. Powell initially downplayed the price increases, describing them as “transitory.” It proved a consequential mistake -- and Powell would later admit his error.

Annual inflation peaked at a 40-year high of 9.1% in June 2022. By then, Powell had begun to ratchet up interest rates and it would continue over the following year. The aggressive series of rate hikes put the central bank’s benchmark rate at its highest level since 2001. The move sent mortgage and credit card rates soaring.

By June 2023, annual inflation had plummeted to 3%, but Americans remained widely dissatisfied with price increases long afterward. Many economists forecast a recession and the type of job losses it typically entails. Fortunately, the downturn never came to pass.

"Inflation stayed high for too long but once it came down, it came down really fast. It came down without creating unnecessary pain in the labor market," Wendy Edelberg, director of the Hamilton Project and senior fellow in economic studies at the Brookings Institution, told ABC News.

In September 2024, less than two months before the presidential election, the Fed cut interest rates by 0.5%. The decision drew criticism from allies of Trump, who considered the move a potential boost for the economy that would benefit incumbent Democrats. Trump went on to win the election.

Within weeks of his return to the White House, in early 2025, Trump voiced public criticism of Powell, urging him to cut interest rates. The attacks intensified criticism of Powell that had begun in Trump’s first term.

Over the ensuing months, Trump began to slam Powell for cost overruns in a renovation project at the Fed’s headquarters in Washington, D.C. Last July, Trump made the first official trip to the Fed by a sitting president in almost 20 years, donning a hard hat as he toured the renovation with Powell.

The Fed attributed spending overruns to unforeseen cost increases, saying that its building renovation would ultimately "reduce costs over time by allowing the Board to consolidate most of its operations," according to the central bank's website.

By January, the Department of Justice had opened a criminal investigation into Powell, ratcheting up an extraordinary clash between the White House and the Fed. It was the first criminal probe of a Fed chair in the 113-year history of the central bank.

The probe centered on Powell’s testimony to Congress last year about the cost overruns. Powell issued a rare video message rebuking the investigation as a politically motivated effort to influence the Fed's interest rate policy.

"No one -- certainly not the chair of the Federal Reserve -- is above the law," Powell said. "But this unprecedented action should be seen in the broader context of the administration's threats and ongoing pressure."

Trump previously denied any involvement in the criminal investigation. The DOJ moved to drop its criminal probe into Powell last month. Washington U.S. Attorney Jeaninne Pirro said the investigation into the office renovation would be taken up by the Fed’s inspector general.

“The attack on the Fed chair was appalling,” Rebel Cole, a professor of finance at Florida Atlantic University who formerly worked at the Federal Reserve, told ABC News. “Powell stood up to it.”

Warsh, a former Fed official, will serve a 4-year term as chair. He is set to lead the Fed in a challenging period for central bank policymakers.

Inflation rose for a second consecutive month as the U.S.-Israeli war with Iran continued to send gasoline prices surging in April, government data on Tuesday showed. Annual inflation jumped to its highest level in three years, according to the U.S. Bureau of Labor Statistics.

Despite the disruption, some measures of economic health have proven resilient.

The unemployment rate held steady at a historically low level of 4.3% in April, leaving it little changed from when Powell began his tenure in 2018.

"The economy is pretty good but far from perfect," Blinder said, faulting Powell in part for elevated inflation, while attributing much of the blame to the Iran war. At the same time, Blinder praised Powell for his commitment to the independence of the Fed.

"That's the legacy that Warsh is inheriting," Blinder said.

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(NEW YORK) -- The Dow Jones Industrial Average on Thursday closed above 50,000, shrugging off a renewed bout of inflation and an apparent impasse in negotiations over the Iran war.

The rise in shares came as President Donald Trump visited Chinese President Xi Jinping in a high-stakes summit between the leaders of the world's two largest economies.

The Dow closed up 370 points, or 0.7%, registering at 50,063.46. The Dow first topped 50,000 in February. It stands about 55 points shy of an all-time record close.

The S&P 500 jumped 0.7%, while the tech-heavy Nasdaq increased 0.8%.

A group of corporate executives joined Trump on the trip, including Tesla CEO Elon Musk, Nvidia CEO Jensen Huang and Apple CEO Tim Cook.

After a dramatic welcoming ceremony, Trump sat down with Xi on the first day of a multi-day summit, during which Trump said he'd seek to deepen diplomatic and economic ties.

The trip came at a crucial time for Trump as the war with Iran drove up prices for Americans at home due in large part due to Iran's effective closure of the Strait of Hormuz. China is Iran's principal oil consumer.

Inflation rose for a second consecutive month as the war continued to send gasoline prices surging in April, government data this week showed.

Annual inflation jumped to its highest level in three years, according to the U.S. Bureau of Labor Statistics.

Sunny investor attitudes stem from robust corporate earnings, as well as milder economic fallout from the war than some forecasters feared, some analysts previously told ABC News.

Trump, they added, has displayed a willingness to back off of actions if they threaten a severe market reaction, reassuring investors wary of a prolonged conflict.

Despite the disruption, some measures of economic health have proven resilient.

Hiring slowed in April but remained solid, exceeding economists’ expectations, government data last week showed. The unemployment rate held steady at 4.3% in April, a low level by historic standards.

Additionally, the economy grew at an annualized rate of 2% in the first quarter of 2026, marking an acceleration from 0.5% growth recorded in the previous quarter.

ABC News' Kevin Shalvey and Jon Haworth contributed to this report.

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(WASHINGTON) -- The Senate voted Wednesday to confirm Federal Reserve chair nominee Kevin Warsh, clearing the way for Warsh to replace central bank head Jerome Powell when his term ends later this week.

The Senate confirmed Warsh by a vote of 54 to 45. Sen. John Fetterman, D-Pa., was the lone Democrat to vote in favor of Warsh.

The vote comes weeks after the Department of Justice moved to drop its criminal probe into Powell. Before that, Warsh had faced a bipartisan stonewall in the Senate Banking Committee over the investigation.

The probe into Powell focused on alleged false testimony to Congress about an office renovation. Powell, whose term ends on Friday, called the investigation a politically motivated effort to influence interest-rate policy.

Last month, Washington U.S. Attorney Jeaninne Pirro said the investigation into the office renovation would be taken up by the Fed’s inspector general.

Sen. Thom Tillis, R-N.C., who previously vowed to oppose Warsh's nomination on account of the investigation, said he would flip his vote after the investigation was set aside. Tillis greenlit the nomination in a committee vote last month, helping advance Warsh to a confirmation vote on the full Senate floor.

Powell said last month that he would stay on at the central bank's board of governors after his term expires next month as the investigation into the central bank's office renovation continues.

"I've said I won't leave the board until this investigation is well and truly over with transparency and finality, and I stand by it," Powell said at a press conference in Washington, D.C.

"My concern is really about the series of legal attacks on the Fed, which threaten our ability to conduct monetary policy without considering political factors," Powell added.

Trump previously denied any involvement in the criminal investigation.

Powell could remain on the Fed's 12-member policymaking board until 2028, retaining a role in the central bank's interest-rate policy over that period.

Warsh, a former Fed official, will serve a 4-year term as chair. He is currently a fellow at the Hoover Institution conservative think tank, which is based at Stanford University.

During his term as a Fed governor in the late 2000s and early 2010s, Warsh gained a reputation as an interest-rate “hawk,” meaning he generally preferred higher interest rates as a means of ensuring low and stable inflation.

In recent months, however, Warsh has voiced support for lower interest rates, rebuking the Fed’s concern about inflation risk posed by a flurry of new tariffs issued last year.

Warsh is set to take the helm of the Fed in a challenging period for central bank policymakers.

Inflation rose for a second consecutive month as the U.S.-Israeli war with Iran continued to send gasoline prices surging in April, government data on Tuesday showed. Annual inflation jumped to its highest level in three years, according to the U.S. Bureau of Labor Statistics.

The Fed has opted to hold interest rates steady at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.

If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking an economic slowdown.

Markets forecast a roughly 60% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool. The odds of an interest-rate hike by the end of the year stand at about 30%.

Copyright © 2026, ABC Audio. All rights reserved.

(NEW YORK) -- Inflation rose for a second consecutive month as the U.S.-Israeli war with Iran continued to send gasoline prices surging in April, government data on Tuesday showed. The inflation report matched economists' expectations.

Prices rose 3.8% in April compared to a year earlier, marking an increase from a year-over-year inflation rate of 3.3% in the prior month. Annual inflation jumped to its highest level in three years, U.S. Bureau of Labor Statistics (BLS) data showed.

"I don't think about Americans' financial situation," President Donald Trump told reporters Tuesday as he was departing for a high-stakes trip to China, when asked to what extent Americans' financial situations were motivating him to make a deal with Iran.

"The most important thing, by far, is Iran cannot have a nuclear weapon," the president further said, adding, "Every American understands."

As recently as February, inflation stood at 2.4%, clocking in just a tick above the Federal Reserve’s target level of 2%.

The jump in prices last month owed in large part to a sharp rise in costs for products impacted by a global oil shock. Gasoline prices were 5% higher in April than March, the BLS report said. Airline fares climbed 2.8% from the previous month.

The Middle East conflict prompted the Iranian closure of the Strait of Hormuz, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff prompted one of the largest oil shocks ever recorded.

The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.

Crude oil is the main ingredient in auto fuel, accounting for more than half of the price paid at the pump, according to the federal U.S. Energy Information Administration.

The price of an average gallon of gas stood at $4.50 as of Monday, AAA data showed – an increase of $1.52 per gallon since the war began on Feb. 28. That amounts to a roughly 50% price jump in about two-and-a-half months.

The surge in fuel prices sent costs surging for gas-dependent transportation, such as airline tickets. In March, airfare costs jumped more than 3% from a month earlier.

Within weeks, the jump in prices could spread to groceries, furniture and just about any other item delivered by diesel-fueled trucks and tankers, some analysts previously told ABC News.

The recent rise in prices has left many consumers feeling glum. In May, consumer sentiment fell to the lowest level ever recorded, according to a monthly survey conducted by the University of Michigan since 1978.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shoppers remain pessimistic. In theory, a slowdown of spending could slow the economy.

By some measures, however, the U.S. economy has proven resilient amid the war.

Hiring slowed in April but remained solid, exceeding economists’ expectations, federal government data last week showed. The unemployment rate held steady at 4.3% in April, a low level by historic standards. Additionally, the economy grew at an annualized rate of 2% in the first quarter of 2026, marking an acceleration from 0.5% growth recorded in the previous quarter.

However, a persistent increase in consumer prices may put pressure on the Fed to raise interest rates as a means of dialing back inflation.

The Fed has opted to hold interest rates steady at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.

If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking an economic slowdown.

Markets forecast a roughly 70% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool.

ABC News' Karen Travers, Emily Chang and Fritz Farrow contributed to this report.

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(LOS ANGELES) -- A Chevron gas station in Los Angeles elicited headlines in recent weeks for charging an eye-popping $8.71 a gallon, becoming an emblem for the spike in fuel costs set off by the Iran war.

Sky-high gas prices nationwide owe primarily to a historic oil shock that followed Iran’s effective closure of the Strait of Hormuz. But a lesser-known contributor helps account for just how high prices have gotten, at least at some name-brand stations selling fuel from the likes of Chevron, Shell and ExxonMobil.

Branded stations, which make up almost half of gas stations nationwide, charge about 6 cents more per gallon on average than their unbranded counterparts, according to data from the Oil Price Information Service (OPIS), a Dow Jones company, for the week ending on May 2. That price gap marks little change from where it stood before the war, OPIS data showed.

In at least one state, the price disparity runs significantly higher. Gas at a Chevron station in California costs an average of 48 cents more per gallon than the price at an unbranded station, the California Energy Commission (CEC) found in 2024. After Chevron, the most expensive average gas prices in California were found at Shell, 76 and Arco-branded stations, the CEC said.

Some analysts said the higher price of branded gas is due to additional costs, such as proprietary additives in the fuel, as well as a producer’s marketing budget and the payment forked over by stations for guaranteed access to its gas – costs that are passed on to consumers.

Other analysts and a California state watchdog, however, have said that the price disparity may stem from the market dominance of a handful of companies, allowing them to drive up the retail price.

The scrutiny comes as some large oil companies like British Petroleum, Valero and Marathon Petroleum report soaring profits amid the Iran war, though Chevron and Exxon saw profits decline due in part to one-time paper losses stemming from financial hedges meant to protect them against a possible price drop.

The price of an average gallon of gas currently stands at $4.52, an increase of $1.54 per gallon since the war began on Feb. 28, AAA data showed. That amounts to a nearly 52% jump in about two-and-a-half months.

Patrick Penfield, a professor of supply chain practice at Syracuse University, said the recent surge in prices could prompt a reexamination of the costs baked into the price at the pump, including the added charge for branded gas.

“When you see such big price increases for gasoline, everything should be looked at,” Penfield said.

Chevron did not directly respond to an ABC News request for comment. However, Jim Stanley, director of media relations at the Western States Petroleum Association, a industry trade group, contacted ABC News at Chevron's request.

Drivers choose branded gas stations as a matter of customer preference centered on issues like lighting, bathroom cleanliness or location, Stanley said.

"Any branded product – whether it’s medication or groceries or clothing – is going to generally cost more than a generic alternative," he added.

Stanley further said roughly 95% of branded gas stations operate as franchises, meaning they enter into agreements with big-name companies but retain self-ownership.

"Branded gas stations can have these brand standards that they hold their franchisees to: a higher standard than an independently owned store," Stanley added.

Kelly Davila, a spokesperson for Exxon, said the company doesn't "own or operate our retail stations."

Shell declined to respond to ABC News' request for comment.

Phillips 66, the parent company of 76, did not respond to ABC News' request for comment. Neither did Marathon Petroleum, the parent company of Arco.

Branded gas stations account for about 45% of stations nationwide, selling gas under the name of a major fuel company, OPIS data shows. Each of the brands touts a unique blend of additives that it says improves the gasoline and eases its effect on car engines. The extra ingredients go beyond the minimum standards mandated by federal and some state regulators, Denton Cinquegrana, chief oil analyst at Dow Jones Energy, told ABC News.

“At the end of the day, all gasoline has to meet a federal standard,” Cinquegrana said. “The branded gasoline goes above and beyond that minimum requirement.”

Higher prices charged by name-brand stations – a dynamic that stretches back decades – can be traced in part to spending on the development and production of the additives, Cinquegrana added: "They’re trying to recoup some of that investment.”

Some analysts, however, said it remains unclear whether the added ingredients deliver a meaningfully improved product.

“Regardless of each company’s claim, there is not sound evidence supporting the fact that additives do indeed improve the quality of gasoline, at least to the extent that the consumers perceive it to,” a study issued by the non-profit RAND corporation found in 2010.

The California Division of Petroleum Market Oversight (DPMO), a state watchdog agency, last year said it was "unable to independently verify claims that branded gasoline is superior to unbranded gasoline."

When asked about studies disputing the value of additives, Stanley, of the Western States Petroleum Association, declined to comment.

The higher price of branded gas also owes to marketing budgets borne by the big-name companies as well as elevated costs paid by retailers as part of agreements with the brands that guarantee them priority access in the event of a supply shortage, the U.S. Government Accountability Office said in a study of the issue published in 2005.

“Gas stations pay more for a contract for branded gasoline because they have a guarantee of supply. And they have a major global brand backing them up,” Cinquegrana said.

Some analysts and a California watchdog disputed those explanations. Rather, they said, the higher prices may reflect market power enjoyed by the large firms, giving them leeway to raise prices without fear of competition.

“My own reading of the data is that the branded companies are able to take advantage of a lack of a competitive market and are acting almost like an oligopoly,” Paasha Mahdavi, a professor of energy governance and political economy at the University of California, Santa Barbara, told ABC News, using a term that describes an industry dominated by a small number of companies.

Mahdavi focused on the relatively large price gap in California between branded and unbranded gas, which has widened in recent years.

In 2019, branded gas from companies like ExxonMobil, Arco, Valero and Chevron cost an average of 20 cents more per gallon in California; within five years, that price disparity had climbed to 31 cents, according to a DPMO study issued last year. Over that same period, the profitability of oil refiners in California has increased, DPMO said.

The rise in refinery profitability may be traced to the “exercise of market power by gasoline suppliers,” DPMO added, saying 90% of in-state refining capacity is controlled by four companies. As a result, elevated wholesale prices could be passed along the supply chain, DPMO said.

The largest companies appear to have “pretty strong control of not only upstream assets like oil and gas, but also control of the gas stations that are preferred by consumers based on location,” Mahdavi said. “They’re able to charge a higher premium.”

Valero did not respond to ABC News' request for comment.

Stanley, of the Western States Petroleum Association, said he is unsure why California features a larger gap in price between branded and unbranded gas than other states. One contributor, he said, could be the relatively low density of gas stations in the state.

"Competition brings down costs. When a retailer doesn't see that same level of competition, you can see that reflected in higher prices."

Stanley faulted environmental regulations in California for high overall gas prices.

"Branded or unbranded, gas in California is the most expensive in the country. That's because of supply constraints that have been created by state policies."

Mahdavi further said that the locations of branded gas stations may carry additional costs due to higher rents, accounting for some of the price gap.

The rise in prices during the Iran war offers an opportunity to revisit the factors that contribute to the price at the pump, according to Mahdavi.

“We can shine more light on what is driving these higher prices," he said.

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(WASHINGTON) -- PayPal has agreed to waive $30 million in processing fees in order to resolve a federal investigation into an investment program that sought to boost Black and minority-owned businesses, the Justice Department announced Tuesday.

The probe is just one of a number launched under the Trump Justice Department scrutinizing companies that launched diversity, equity and inclusion (DEI) initiatives that Republicans have cast as unlawful and discriminatory.

DOJ had been probing whether PayPal's program, which was launched in 2020 following the killing of George Floyd amid social unrest around the country, violated a federal law prohibiting creditors from discriminating against applicants based on race.

In order to avoid further investigation, the company has agreed to waive processing fees for roughly $1 billion in transactions — estimated at $30 million -- "for eligible American small businesses that are veteran-owned or engaged in farming, manufacturing, or technology."

The announcement by DOJ does not explain why PayPal's transaction fee waivers will be directed to those specific classes of small businesses.

It has also agreed to launch a new small business initiative that does not account for "the race or national origin of the business owners."

“This Department of Justice is delivering on President Trump’s vow to root out illegal DEI from every corner of corporate America,” Acting Attorney General Todd Blanche said in a statement announcing the settlement. “American corporations are on notice: you will face our aggressive enforcement if you use race or national origin to discriminate against qualified Americans.”

The settlement does not include any admission of wrongdoing by PayPal, and under the agreement, the DOJ acknowledges it "has not made any determinations or findings regarding PayPal violating [the Equal Credit Opportunity Act] or any other federal law related to the economic opportunity fund."

“For more than two decades, PayPal has helped small businesses start, scale, and thrive by expanding access to digital financial tools," a PayPal spokesperson said in a statement to ABC News. "We’re excited to launch the Small Business Initiative to infuse American small businesses with even more economic opportunity.”

Copyright © 2026, ABC Audio. All rights reserved.

(NEW YORK) -- An inflation report on Tuesday will provide a fresh gauge of prices as the Iran war ratchets up costs for gasoline, airfares and other expenses.

Economists expect consumer prices to have risen 3.8% in April, when a surge in gasoline costs took hold weeks into the war, which would mark a significant acceleration from 3.3% in the previous month.

As recently as February, inflation stood at 2.4%, clocking in just a tick above the Federal Reserve’s target level of 2%.

The Middle East conflict prompted the Iranian closure of the Strait of Hormuz in March, a maritime trading route that facilitates the transport of about one-fifth of global oil supply. The standoff prompted one of the largest oil shocks ever recorded.

The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.

Crude oil is the main ingredient in auto fuel, accounting for more than half of the price paid at the pump, according to the federal U.S. Energy Information Administration.

The price of an average gallon of gas stood at $4.52 as of Monday, AAA data showed – an increase of $1.54 per gallon since the war began on Feb. 28. That amounts to a nearly 52% price jump in about two-and-a-half months.

The surge in fuel prices sent costs surging for gas-dependent transportation, such as airline tickets. In March, airfare costs jumped more than 3% from a month earlier.

Within weeks, the jump in prices could spread to groceries, furniture and just about any other item delivered by diesel-fueled trucks and tankers, some analysts previously told ABC News.

The recent rise in prices has left many consumers feeling glum. In May, consumer sentiment fell to the lowest level ever recorded, according to a monthly survey conducted by the University of Michigan since 1978.

Consumer spending, which accounts for about two-thirds of U.S. economic activity, could weaken if shoppers remain pessimistic. In theory, a slowdown of spending could slow the economy.

By some measures, however, the U.S. economy has proven resilient amid the war.

Hiring slowed in April but remained solid, exceeding economists’ expectations, federal government data last week showed. The unemployment rate held steady at 4.3% in April, a low level by historic standards. Additionally, the economy grew at an annualized rate of 2% in the first quarter of 2026, marking an acceleration from 0.5% growth recorded in the previous quarter.

However, a persistent increase in consumer prices may put pressure on the Fed to raise interest rates as a means of dialing back inflation.

The Fed has opted to hold interest rates steady at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.

If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking an economic slowdown.

Markets forecast a roughly 70% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool.

Copyright © 2026, ABC Audio. All rights reserved.

(NEW YORK) -- Hiring slowed in April as a rise in fuel prices hammered shoppers weeks into the war with Iran, U.S. government data on Friday showed.

The U.S. added 115,000 jobs in April, according to the report, which marked a cooldown from 178,000 jobs added in March. The reading for April exceeded economists' expectations.

The unemployment rate held steady at 4.3% in April, the Bureau of Labor Statistics (BLS) said. Unemployment remains low by historical standards.

The U.S. Bureau of Labor Statistics (BLS) collected the previous month's survey data through the second week of March, before the full effects of the oil shock set off by the war.

As in previous months, the health care industry stood out as a top source of hiring in April, adding 37,000 jobs, the BLS said. The retail sector, as well as transportation and warehousing, also contributed to the increase in hiring.

Employment in the federal government continued to decline in April, shedding 9,000 jobs, the BLS said. The federal government has lost 348,000 jobs, or nearly 12% of its workforce, since October 2024, a month before President Donald Trump was elected.

The hiring figure for March was revised upward from 178,000 jobs added to 185,000 jobs added. Hiring for February, however, was revised downward from a loss of 133,000 jobs to a loss of 156,000 jobs.

The fresh data arrived as the war continues to drive up gasoline prices and borrowing costs, threatening a drag on the economy.

The U.S. added an average of about 15,000 jobs per month in 2025, BLS data showed. That performance indicated a drop-off from 186,000 jobs added each month in 2024.

The Middle East conflict, which began on Feb. 28, prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil.

The U.S. is a net exporter of petroleum, meaning the country produces more oil than it consumes. But since oil prices are set on a global market, U.S. prices move in response to swings in worldwide supply and demand.

The price of an average gallon of gas stands at $4.54 as of Friday, marking an increase of $1.56 per gallon since the war started, AAA data showed. That amounts to a roughly 50% jump in about two-and-a-half months.

In theory, a prolonged oil shortage could drive up prices for a vast array of goods, sapping energy from consumer spending, which powers most of the nation’s economic growth.

A potential jump in costs for additional goods delivered through the Strait of Hormuz -- such as fertilizer and diesel fuel -- could also raise prices beyond gasoline, putting pressure on the Federal Reserve to hike interest rates in an effort to quell inflation.

Last month, Fed Chair Jerome Powell described the economic outlook as "highly uncertain."

"We're kind of waiting to see what happens with events in the Middle East," Powell said.

The Fed has opted to hold interest rates steady at three consecutive meetings since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.

The benchmark interest rate stands at a level between 3.5% and 3.75%. That figure marks a significant drop from a recent peak attained in 2023, but borrowing costs remain well above a 0% rate established at the outset of the COVID-19 pandemic.

If the Fed moved to raise interest rates, it would hike borrowing costs for many consumer and business loans, risking a slowdown in hiring.

Markets peg a roughly 70% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool.

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(NEW YORK) -- Apple has agreed to settle a class-action lawsuit for $250 million after the tech giant was accused of marketing Apple Intelligence technologies that "did not exist" yet, according to a Tuesday court filing.

The settlement paves the way for payouts of up to $95 for iPhone users who purchased eligible devices between June 10, 2024, and March 29, 2025.

Plaintiffs in the suit asked a judge on Tuesday to approve the settlement, which they described as "within the range of what is fair, reasonable, and adequate," according to the filing.

The settlement will provide class members up to $95 per device, "depending on claim volume and other factors," the filing states.

The lawsuit, which was originally filed in March 2025, alleged the iPhone manufacturer "violated consumer protection laws when it advertised its new generation of iPhones as a breakthrough in artificial intelligence ('AI'), including significant enhancements to Siri, iPhone's digital assistant," according to Tuesday's court filing.

The lawsuit itself specifically accused Apple of introducing Enhanced Siri capabilities -- such as AI-powered digital assistant recollection and calendar reminders -- even though they "did not exist or were materially misrepresented."

The plaintiffs also alleged Apple "saturated the market with deceptive ads" promoting that technology, which were "viewed widely by the Public" online and in ad spots during major broadcast events. They alleged that promotion led consumers to buy iPhones due to the perception that Siri had some of those enhanced AI features.

According to Tuesday's settlement document, Apple has "maintained that its ads were not misleading because it disclosed from the outset the Apple Intelligence features would be delivered over time and continue to evolve."

The company also "maintained that it successfully delivered more than 20 Apple Intelligence features" and argued that "consumers purchase new iPhones for any number of reasons that have nothing to do with Enhanced Siri features," the settlement document states.

An Apple spokesperson confirmed the settlement in a statement to ABC News on Wednesday.

"Since the launch of Apple Intelligence, we have introduced dozens of features across many languages that are integrated across Apple's platforms, relevant to what users do every day, and built with privacy protections at every step," the spokesperson said. "These include Visual Intelligence, Live Translation, Writing Tools, Genmoji, Clean Up and many more."

They added, "Apple has reached a settlement to resolve claims related to the availability of two additional features. We resolved this matter to stay focused on doing what we do best, delivering the most innovative products and services to our users."

The settlement payout applies to a list of iPhone 15 and 16 devices, including the iPhone 16, iPhone 16e, iPhone 16 Plus, iPhone 16 Pro, iPhone 16 Pro Max, iPhone 15 Pro or iPhone 15 Pro Max, according to Tuesday's filing.

The document notes there are approximately 37 million eligible devices.

The settlement will apply to those who purchased the eligible devices and "who reside in the United States and purchased an Eligible Device in the United States for purposes other than resale," according to the document.

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(NEW YORK) -- Sky-high gasoline prices are hammering drivers across the United States as the Iran war chokes off global oil supply. California, however, may be feeling the sting more than anywhere else.

The average price of a gallon of gasoline in California clocks in at $6.13, standing 36% higher than the national average, AAA data showed. Some elected officials in the state have warned of a potential oil and gas shortage that could push prices up even further.

Siva Gunda, the vice chairman of the California Energy Commission, on Tuesday said at a hearing of the state assembly that California retains enough gasoline to satiate demand over the coming weeks.

"I do not see presently -- at least up to six weeks -- a supply shortfall," Gunda said. "Beyond that, based on what we're hearing from the industry and what we've observed, the pricing will move molecules to California, but it will come at a price."

David Alvarez, a Democratic California state assembly member who represents Southern San Diego, warned of the potential impact on consumers.

"For six weeks, at least, there seems to be some certainty. But almost as certain is if this situation continues after six weeks, we would likely see some price increases," Alvarez said.

Fuel prices in California typically run higher than other states, even in the best of times. That usual price disparity stems from regulations and taxes imposed in the Golden State, among other factors.

The Iran war has exacerbated the price pressure, exposing California's dependence in large part on foreign imports, some analysts said. A shutdown of some key oil refineries in recent months worsened California's vulnerability, slashing the state's gasoline output in the absence of alternative fuel sources.

Still, the drop-off in gas supply is unlikely to produce a shortage of product at local gas stations, since an ongoing surge in prices should deter some buyers, analysts said. Under such a scenario, known as "demand destruction," high prices make gas unaffordable for some drivers, forcing them to forgo gasoline use altogether.

"A shortage within the continental U.S. would take a really extreme situation, since prices respond to supply and demand," Susan Bell, a senior vice president at the consulting firm Rystad Energy, told ABC News.

The Middle East conflict, which began on Feb. 28, prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the worldwide supply of oil. As a result, global oil prices have soared more than 50%.

The vast majority of oil that passes through the strait is bound for Asian markets, but some of it reaches the United States, including California. That dependence has worsened a widely felt problem: since oil prices are set on a global market, prices have climbed for just about everyone as buyers chase fewer barrels of crude.

California imports about three-quarters of its oil from foreign nations and Alaska, California Energy Commission (CEC) data shows. Roughly 30% of the state's oil comes from the Middle East, especially Iraq and Saudi Arabia, according to the agency.

"California is challenged buying crude oil because they did buy from the Middle East," Bell said.

The oil bottleneck has driven up the price of crude, straining the state's supply chain. But the shortfall of gasoline in the state owes primarily to a decline in the availability of refined products, some analysts said.

California ships in a portion of its auto fuel from Asia, but those imports have been disrupted by the war, they added.

The shutdown of two major oil refineries in recent months has diminished the state's ability to make up for the lost gasoline with in-state production, they added. A longstanding absence of adequate pipeline infrastructure connected to other states, meanwhile, has prevented California from turning to domestic supply.

Gasoline inventory in the state averaged 9.55 million barrels over the four weeks ending on April 24, CEC data shows. That figure puts inventories near the lowest level on record dating back to 2005, according to a Reuters analysis. That total stock includes non-California gasoline, blending components and California's gasoline blend.

"California has designed an energy island in terms of the products we actually use. We're not connected to the rest of the U.S. as efficiently as many other states are," Paasha Mahdavi, a professor of energy governance and political economy at the University of California, Santa Barbara, told ABC News.

As a result, Mahdavi added: "There's a crunch hitting gas stations."

Despite the supply squeeze, California is unlikely to suffer from long lines at gasoline stations or customers leaving with empty tanks, some analysts said.

Rather, the price of gasoline will continue to move up, reaching such heights that some buyers will turn to alternatives or simply go without fuel, Severin Borenstein, a professor of Business Administration and Public Policy at the University of California, Berkeley, told ABC News.

If public officials were to put a price cap on gasoline, then customers would likely flock to the pump and empty inventories, Borenstein added. As prices surge, however, customers will fall out of the market instead.

"We don't have any gas lines because we don't regulate the price of gas," Borsenstein told ABC News. "As much as people hate high gas prices, they hate gas lines even more."

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(NEW YORK) -- The Department of Transportation said on Saturday the majority of airlines will be capping tickets prices for Spirit Airlines travelers who need to rebook their canceled flights.

Some carriers have even reduced fares on high volume routes where Spirit used to operate.

Spirit began winding down operations early Saturday morning after talks between the airline and the federal government over a $500 million rescue deal stalled.

Spirit said that travelers who booked their tickets with a credit or debit card will be automatically refunded.

United, Delta, JetBlue and Southwest said they are capping ticket prices specifically for Spirit customers who need to rebook cancelled flights.

To access these special prices, individuals will need to provide at least a Spirit flight confirmation number and proof of payment, the airlines said.

These fares will only be available for a short period:

JetBlue: Available for 72 hours
Southwest: Available for 72 hours; only in person at an airport ticket counter
Delta: Available for five days
United: Available for two weeks online 
American Airlines and Delta Air Lines are offering reduced fares on high-volume Spirit routes.

United Airlines said for the next two weeks, customers who were booked on Spirit can get one-way tickets on United flights from most cities where Spirit previously operated, including Atlanta, Chicago, Fort Lauderdale, Houston, Las Vegas, Miami, Newark, New Orleans and Orlando.

The airline said it has capped most of its fares at $199, though exceptions apply with longer flights not priced higher than $299.

Travelers will need to enter their Spirit confirmation number and verify they were scheduled to travel between May 2 through May 16 in order to be qualify for these special fares.

American Airlines said it has also launched a page on its website that displays rescue fares to and from a range of domestic and international destinations for Spirit customers needing to rebook travel.

The airline said it's also reviewing adding additional capacity, including flying bigger planes and adding more flights on routes Spirit used to fly, to accommodate as many passengers as possible.

Allegiant Air has also committed to freezing fare prices across routes that overlap with Spirit. To support impacted travelers, Frontier Airlines is offering up to 50% off base fares across its network until May 10.

To help Spirit employees, the Department of Transportation said most major U.S. carriers are extending travel pass benefits and spare jump seats so employees can return to their homebases.

Airlines are also offering Spirit team members preferential employment interviews to ensure they jump the queue. American and United said they're creating microsites for Spirit employees looking to continue a career in aviation, per the federal agency. 

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(WASHINGTON) -- President Donald Trump said an announcement was expected Friday on Spirit Airlines, amid a report that the airline was preparing to cease operations after a $500 million rescue deal fell apart.

The Wall Street Journal first reported that the airline is preparing to shut down operations.

When asked if the administration had decided against bailing out Spirit Airlines, Trump told reporters on Friday, "I guess we're looking at it. If we could do it, we do it, but only if it's a good deal."

"No institution's been able to do it," he continued. "I said 'I'd like to save the jobs,' but we'll have an announcement sometime today. We gave them, we gave them a final proposal."

ABC News has reached out to the White House for additional comment.

A spokesperson for Spirit Airlines declined to comment on ongoing discussions as it related to the WSJ report.

"Spirit is operating as usual," the spokesperson said in a statement. 

The Florida-based carrier is currently operating with over 40 flights in the air, according to FlightRadar24 data. 

Other airlines have responded to the news saying they will be ready to help stranded passengers in the event that Spirit shuts down. 

American Airlines told ABC News it will offer fare caps on main cabin tickets for routes they share with Spirit. 

Similarly, United Airlines said they’re "preparing to support Spirit customers in the event of a shut down."

"We are ready to support customers who may be impacted if Spirit Airlines ceases operations, with a focus on helping people continue their travel plans with low-fare options," Frontier Airlines posted Friday on X.

ABC News previously reported that Spirit could run out of the cash it needs to keep operating within days, not weeks, according to sources familiar with the matter. 

Spirit filed for bankruptcy for the second time last August -- having previously filed for Chapter 11 bankruptcy protection in November 2024 -- to restructure financially and "reduce its cost structure," with hopes of emerging from Chapter 11 by the spring or summer of 2026.

The soaring price of jet fuel amid the ongoing war in Iran has had widespread impact on airlines and travel expert Katy Nastro, of airfare monitoring site Going, previously told ABC News that Spirit could be out of time to try and turn things around.

"It's never a good sign to file bankruptcy to begin with, but a second within six months, even worse," Nastro said. "Spirit suggested that they were going to be able to come out of bankruptcy this time by the spring. We're in the spring now, we have higher jet fuel prices -- this is a recipe for disaster for them."

What travelers need to know about Spirit Airlines shutting down

Bradley Akubuiro, a crisis expert and former Boeing spokesperson, told ABC News that losing a budget airline like Spirit will raise the floor on airfares.

"Frontier, Allegiant, and Breeze are still flying, but Spirit was the biggest, and in the markets it dominated -- Fort Lauderdale, Orlando, a lot of the Caribbean -- there isn't another carrier ready to backfill at the same price tomorrow," he explained. "The pain isn't immediate. It's structural. A fare that used to be $89 is $140 six months from now, and most consumers won't connect the two."

When airlines liquidate, they immediately cease operations without notice, which means that passengers will be stranded and employees will not show up to work. 

There is generally no airline assistance when it comes to helping stranded passengers after an airline shuts down operations. 

For any ticketed passengers scheduled to fly Spirit or already in the middle of their trip, below are some tips from travel experts on how to navigate the situation.

Don't immediately cancel your flight, Nastro advised, adding that travelers who cancel forfeit their right to a refund. And make sure to keep all records and receipts.

If you booked with a credit card, you can dispute the charge with your credit card company and likely get the money back.  

There is less protection if you booked with a debit card, but you can still contact your company to see if you can get reimbursed. 

If you have travel insurance, she reminded customers to read the fine print as not all of them cover this type of scenario. 

Per the Department of Transportation, customers could consider filing a proof of claim in the bankruptcy proceeding to try and get a partial refund, but the claim will be considered along with all the other creditors that the airline owes money to and you may only get a small portion of your money back.

If you're stranded, check options with other airlines that might be able to offer relief flights, fare caps or emergency fares, like they would do after a big weather event.

This is a developing story, check back for updates.

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(NEW YORK) -- The United States economy grew at a solid pace over the first three months of 2026, rebounding from sluggish performance at the end of last year, a government report on Thursday showed.

The economy grew at an annualized rate of 2% in the first quarter, marking an acceleration from 0.5% growth recorded in the previous quarter. The performance came in slightly below economists' expectations.

The fresh data covers a period mostly before the outset of the Iran war on Feb. 28, which sent gasoline prices surging and prompted warnings of a possible recession.

The jump in economic output over the first quarter owes to a rise in government spending, exports and investment, the U.S. Commerce Department said.

Consumer spending slowed down from the previous quarter, however, providing a cautionary note for the nation's outlook. Consumer spending accounts for about two-thirds of U.S. economic activity.

Households, meanwhile, are weathering a surge in prices as a result of an oil shock set off by the Iran war.

The Personal Consumption Expenditures Price Index, a measure of inflation preferred by the Federal Reserve, increased 3.5% in March, the report showed. That reading marked a jump from a 2.8% rate in the previous month.

The Middle East conflict prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the global supply of oil and natural gas.

The average price of a gallon of gas stands at $4.30 as of Thursday, hitting the highest level in four years.

The Federal Reserve held interest rates steady on Wednesday, in part due to the recent rise in costs. The benchmark rate stands at a level between 3.5% and 3.75%.

The solid economic performance at the outset of this year may allow the Fed to keep interest rates elevated for longer as it seeks to avert a prolonged rise in prices amid the Iran war.

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(WASHINGTON) -- A Senate committee on Wednesday voted to advance Fed chair nominee Kevin Warsh, clearing a key hurdle in his path to replace Fed Chair Jerome Powell before his term ends next month. Warsh's nomination will move to a confirmation vote on the floor of the upper chamber.

The Senate Banking Committee voted 13-11 to approve the nomination on a party-line vote, with Republicans supporting the nomination and Democrats opposing it.

The vote comes days after the Department of Justice moved to drop its criminal probe into Powell. Before that, Warsh had faced a bipartisan stonewall in the Senate Banking Committee over the probe.

Sen. Thom Tillis, R-N.C., who previously vowed to oppose Warsh's nomination on account of the investigation, said he would flip his vote after the investigation was set aside. Tillis voted to approve the nomination on Wednesday.

The probe into Powell focuses on alleged false testimony to Congress about an office renovation. Powell, who was appointed by Trump in 2017, has rebuked the investigation as a politically motivated effort to influence interest-rate policy.

Powell's term as Fed chair ends on May 15, but he said last month he would stay in the position until Warsh is confirmed.

Warsh, a former Fed official, is currently a fellow at a conservative think tank called the Hoover Institution, which is based at Stanford University.

At testimony before the Senate Banking Committee last week, Democrats sharply criticized Warsh, saying the independence of the Fed would be at risk if Warsh were to take policy cues from Trump.

In his opening remarks, Warsh voiced support for the independence of the Fed in its role setting interest rates. He used the term "monetary policy" to describe the central bank's task of adjusting benchmark borrowing costs.

"Monetary policy independence is essential. Monetary policymakers must act in the nation's interest," Warsh said.

Still, Warsh defended the right of public officials, including presidents, to voice their views on interest-rate policy, saying such comments do not infringe on Fed independence.

"Central bankers must be strong enough to listen to a diversity of views from all corners," Warsh said.

Sen. Elizabeth Warren, D-Mass., the top Democrat on the committee, responded directly to Warsh's defense of a president's right to criticize the Fed, saying the federal investigation of Powell amounts to a pressure campaign that extends beyond public criticism of Fed policies.

"You said it’s perfectly fine for elected officials to state their views on interest rates. But that’s not what Donald Trump is doing," Warren said, addressing Warsh.

Republicans, including Sen. Tim Scott, R-S.C., the chairman of the Senate Banking Committee, praised Warsh, saying the Fed nominee would focus central bank policy on economic stewardship. During the tenure of President Joe Biden, Scott claimed, the Fed shifted some of its attention to the implications of issues like climate change.

"An independent Federal Reserve is essential to achieving its mission. That independence must be protected," Scott said.

During his term as a Fed governor in the late 2000s and early 2010s, Warsh gained a reputation as an interest-rate “hawk,” meaning he generally preferred higher interest rates as a means of ensuring low and stable inflation.

In recent months, however, Warsh has voiced support for lower interest rates, rebuking the Fed’s concern about inflation risk posed by a flurry of new tariffs issued last year.

The Senate committee vote came hours before the Fed is set to announce its latest decision on the level of interest rates. The central bank is widely expected to hold interest rates steady.

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(NEW YORK) -- The Federal Reserve on Wednesday will issue its latest announcement on interest rates as gasoline prices in the U.S. reach their highest level in four years. The move marks what may be the central bank's final decision on borrowing costs under the leadership of Fed Chair Jerome Powell.

The policy announcement is set to arrive at an uneasy moment for the central bank. The Iran war set off a rapid acceleration of price increases, posing a challenge for policymakers bedeviled by elevated inflation and sluggish hiring.

Investors overwhelmingly expect the Fed to leave rates unchanged on Wednesday, according to the CME FedWatch Tool, a measure of market sentiment.

A standoff between the White House and Congress, meanwhile, has cast doubt over succession plans for Powell as his term comes to a close next month.

President Donald Trump’s nominee to lead the Fed, Kevin Warsh, has faced a bipartisan stonewall in the Senate Banking Committee over a federal criminal investigation into Powell.

The Department of Justice moved to drop the probe last week, paving the way for Warsh to advance in a committee vote. If his nomination advances, Warsh would face a confirmation vote on the Senate floor.

The investigation into Powell focuses on alleged false testimony to Congress about an office renovation. Powell, who was appointed by Trump in 2017, has rebuked the probe as a politically motivated effort to influence interest-rate policy.

Powell's term as Fed chair ends on May 15, but he said last month he would stay in the position until Warsh is confirmed.

Even after his successor is confirmed, Powell could remain on the Fed's 12-member policymaking board until 2028, retaining a role in the central bank's interest-rate policy. Powell has not indicated whether he intends to remain on the board.

Elevated price increases have coincided with a slowdown of economic growth, threatening to intensify an economic double-whammy known as "stagflation," which poses difficulty for the Fed.

If the Fed opts to lower borrowing costs, it could spur growth but risk higher inflation. On the other hand, the choice to raise interest rates may slow price increases but raises the likelihood of a cooldown in economic performance.

The Fed held interest rates steady last month at its first meeting since the U.S.-Israeli war with Iran drove up gasoline prices and risked a wider bout of inflation.

The central bank's move marked the second consecutive time it has opted to maintain interest rates at current levels since the outset of 2026. Before that, the Fed cut interest rates a quarter-point three straight times.

Warsh, a former Fed official, is currently a fellow at a conservative think tank called the Hoover Institution, which is based at Stanford University.

During his term as a Fed governor in the late 2000s and early 2010s, Warsh gained a reputation as an interest-rate “hawk,” meaning he generally preferred higher interest rates as a means of ensuring low and stable inflation.

In recent months, however, Warsh has voiced support for lower interest rates, rebuking the Fed’s concern about inflation risk posed by a flurry of new tariffs issued last year.

Markets peg a roughly 80% chance of interest rates holding steady for the remainder of this year, according to the CME FedWatch Tool.

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(NEW YORK) -- Gasoline prices in the United States hit their highest level in four years on Tuesday as negotiations over the Iran war appeared to show little signs of a resolution.

This is a developing story. Please check back for updates.

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(OAKLAND, Calif.) -- Billionaire entrepreneur Elon Musk and prominent AI executive Sam Altman are facing off in court with major implications for OpenAI, the San Francisco-based tech giant led by Altman.

The federal case, which concerns OpenAI's evolution from nonprofit to profit-seeking, kicked off on Monday in Oakland, California. Judge Yvonne Gonzalez Rogers is managing proceedings alongside nine jurors and no alternates, according to a court filing last month.

The star-studded list of potential witnesses includes Altman, Musk and Microsoft CEO Satya Nadella, among other tech luminaries, a court filing showed.

Musk sued OpenAI and Altman, its CEO, in 2024, alleging that the company abandoned its mission of benefiting humanity in a sprint toward profits.

Musk, a co-founder of OpenAI, said he reached an agreement with the company's leaders on the nonprofit course of the firm when it launched in 2015. The company later breached that "Founding Agreement," Musk said in a 2024 court filing, when it made ChatGPT-4 available for use by Microsoft -- the tech giant got access to the then-most powerful version of its popular chatbot under an exclusive licensing agreement.

Microsoft and OpenAI have renegotiated the exclusive licensing agreement, allowing OpenAI to strike deals with other tech firms.

OpenAI has rebuked the charges, calling them "baseless." Microsoft has also denied any wrongdoing. Musk, the world's richest person, counts $839 billion in wealth, according to Forbes. He is seeking $150 billion in damages from the tech companies.

OpenAI, which is not publicly traded, valued itself at $852 billion after a round of funding in March. Microsoft's value -- as measured by market capitalization -- stands at about $3.1 trillion.

After jury selection, the case will take place in two sections, Gonzalez Rogers said in a court filing. An initial phase will focus on liability to determine whether any of the defendants committed illegal acts. A subsequent remedies portion will assess potential damages.

Musk and the OpenAI defendants will each be afforded 22 hours to present their case during the liability phase, Gonzalez Rogers said in a court filing earlier this month. Microsoft, also a defendant, will be given five hours for its case.

Musk will plead two claims against OpenAI: unjust enrichment and breach of charitable trust, according to a legal filing last week.

"OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft," Musk said in the lawsuit.

Typically, deals established between a top investor and company leadership are set out in writing with concrete terms, some experts previously told ABC News, leaving Musk in a difficult position as he attempts to invoke what they say appear to be spoken commitments made years ago without a formal contract.

For his part, Musk says in the lawsuit that the agreement was memorialized in a legal filing when OpenAI was incorporated.

In the lawsuit, Musk alleges that Altman and OpenAI President Greg Brockman reaffirmed the founding agreement in written messages over the ensuing years.

"[I] remain enthusiastic about the non-profit structure!" Altman wrote to Musk in 2017, according to the lawsuit.

Musk, who helped bankroll OpenAI, launched a rival AI company in 2023 called xAI, which built a chatbot that competes with ChatGPT.

Acknowledging his previous criticism of the pace and ambitions of AI development, Musk said in a conference call on X in July 2023 that he entered the industry reluctantly.

In the lawsuit, Musk alleges breach of contract, breach of fiduciary duty and unfair business practices.

Musk is seeking a legal order that requires OpenAI to abide by its alleged founding mission of aiding humanity and retaining its nonprofit form, as well as compensation for the funds received by OpenAI while it carried out allegedly unfair business practices.

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(NEW YORK) -- The United Arab Emirates on Tuesday said it would leave the Organization of the Petroleum Exporting Countries (OPEC) next month.

This is a developing story. Please check back for updates.

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(NEW YORK) -- General Motors said on Monday it expects to receive $500 million in refunds from tariffs that were ruled illegal by the Supreme Court.

The automaker is now boosting its full-year profit forecast by $500 million, GM CEO Mary Barra said in a letter to shareholders as the company announced its Q1 results. Barra also cited strong sales of its full-size pickup trucks, despite rising gas prices. 

The federal government opened last week its refund portal to allow companies to apply to get tariff money back. The Supreme Court ruled in February that the International Emergency Economic Powers Act did not give President Donald Trump the power to unilaterally impose tariffs.

GM is one of more than 330,000 importers who paid the IEEPA tariffs that were invalidated, totaling $166 billion.

The IEEPA tariffs alone cost the typical American household $700 last year, according to the nonpartisan Tax Foundation.

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(NEW YORK) -- Thousands of canceled flights in Europe over a spike in jet fuel prices. An energy emergency declaration in the Philippines. A two-week school holiday in Pakistan to conserve fuel used by commuters.

The U.S.-Israeli war with Iran triggered dramatic steps in a slew of countries bent on weathering one of the worst oil shocks in history, stoking concern by some about a possible global recession.

Economists disagree about whether the standoff in the Strait of Hormuz will ultimately drive the world's economy into a downturn, in part because the duration of the waterway's effective closure remains murky. The outcome holds implications for the livelihoods of billions of people and the performance of companies big and small across the globe.

Some analysts said they fear the oil shortage will soon become so dire that crude prices could rise sharply driving up costs for an array of goods and hammering shoppers. The fallout could squeeze businesses and shrink growth, they said.

Others proved more optimistic, pointing to a smaller rise in oil prices than some feared and a recent track record of economic resilience in the face of trade wars and other turmoil. A worldwide downturn, they said, would require a much more prolonged closure of the strait.

"The longer this drags on, the costlier it becomes," Ryan Sweet, chief global economist at Oxford Economics, told ABC News.

Still, Sweet added: "Whether or not this will cause a global recession, it's premature to say."

The conflict, which began on Feb. 28, prompted Iran's effective closure of the Strait of Hormuz, a critical waterway that facilitates the transport of about one-fifth of the global supply of oil and natural gas.

The vast majority of oil that passes through the strait is bound for Asian markets. But since oil prices are set on a global market, prices have climbed for just about everyone as buyers chase fewer barrels of crude.

On Tuesday, Trump extended a ceasefire with Iran, averting a resumption of wide hostilities, although the move left the strait under Iran's effective control. The U.S., meanwhile, has mounted a blockade of Iranian ports in the strait, squeezing a key source of government funds derived from oil exports, while exacerbating the global petroleum shortage.

The Brent futures price, the benchmark index for global oil trading, registered at about $106 a barrel on Friday. That price stood about 50% higher than its pre-war level.

Higher oil and gasoline prices risk a pinch at the pump, as well as additional costs for just about every product delivered across the globe on trucks or ships that run on diesel fuel.

"Oil feeds into inflation, which reduces raw purchasing power -- how much bang for their buck people have," Sweet said. "That slows the economy."

Still, oil prices remain below the highs reached after some previous economic shocks. In 2022, the price of Brent crude surged above $139 per barrel in March, just weeks after the Russian invasion of Ukraine. During the 2008 financial crisis, U.S. gasoline prices shot up as high as $147 a barrel.

Some economic forecasts issued in recent weeks projected that global economic growth could escape the crisis relatively unscathed, as long as the war reaches a resolution in short order and oil prices avoid a steeper climb.

The Organisation for Economic Co-operation and Development (OECD) last month predicted that global gross domestic product (GDP) growth would "remain broadly stable" at 2.9% in 2026. That forecast matched projections issued by the OECD in December, before the war.

The OECD touted strong tech investment and lower-than-expected tariffs, citing "carry-over from robust outcomes in 2025."

Earlier this month, the International Monetary Fund (IMF) projected that GDP growth would register at a solid pace of 3.1% in 2026, noting that the global economy had withstood "higher trade barriers and elevated uncertainty last year."

The forecasts from the OECD and IMF worked under the assumption of a resolution to the conflict by the middle of this year, acknowledging the impact could worsen if it stretches on for longer.

Some economists, by contrast, consider the economic threat a more urgent risk.

Paul Krugman, an economics professor at the City University of New York Graduate Center and a former columnist at the New York Times, criticized the IMF projection on Substack on Monday, faulting the group for "seriously underestimating how badly the global economy could be hit."

"In my view, a full-on global recession is more likely than not if the Strait remains closed for, say, another three months, which seems all too possible," he said.

Rosier forecasts fail to adequately factor in the risk of a significant rise in oil prices over the near term, Krugman said, warning of widespread "demand destruction" as oil becomes increasingly scarce. Under such a scenario, a surge in oil prices would make it unaffordable for many buyers, forcing them to find alternatives or forgo energy use altogether.

Technical definitions vary about what constitutes a global recession, but the gist is a period of sluggish or negative economic growth. For the World Bank, a global recession amounts to a contraction in global per capita GDP; while the IMF considers GDP growth below 2% sufficient to warrant the label of a recession.

A six-month impasse in the strait could push global oil prices as high as $190 in August, Oxford Economics said in a blog post last month. That price shock would send global inflation to 7.7%, near its peak in 2022, the independent economic advisory firm said.

"But unlike 2022, when the global economy kept growing through the price shock, the severity of this disruption tips the world into outright contraction," Oxford Economics added.

In addition to its optimistic baseline projection, the IMF issued a downbeat prediction in the event of a more severe disruption of oil markets that stretches into next year. Under those circumstances, the global economy "would come close to experiencing a recession," the IMF said, noting that it defines a global recession as annual GDP growth below 2%.

Growth below 2% has happened four times since 1980, the group said.

Across the board, economists acknowledged a high degree of uncertainty as the Iran war unfolds. Plus, some said, the negative effects will be unevenly distributed, hitting harder in low-income countries as well as those who depend on oil that passes through the strait.

While the full extent of economic wreckage remains unknown, the prospect of an extended global impact is all but certain, Sweet said.

"This will take a long time to get back up to resembling anything close to normal," he added.

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