(NEW YORK) -- Oil prices surged and stocks tumbled worldwide on Thursday as Iran escalated shipping attacks in a critical tanker route.

Global crude spiked above $100 a barrel on Thursday, crossing a key benchmark. The rise in oil prices defied a U.S. effort hours earlier to reassure markets with an announcement of the second-largest ever release from the nation's petroleum reserve.

A selloff hit Wall Street as traders feared economic fallout from a potentially prolonged bout of elevated oil prices.

The Dow Jones Industrial Average fell 620 points, or 1.3%, while the S&P 500 dropped 1.2%. The tech-heavy Nasdaq declined 1.6%.

Oil markets are suffering a major supply shortage due to an Iranian blockade of the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of the global oil supply.

U.S. gasoline prices jumped to $3.59 on Thursday from $2.94 a month earlier, AAA data showed.

Indexes fell worldwide on Thursday as the jump in oil prices rippled through global markets. Tokyo's Nikkei 225 index dropped 1.2%, while pan-European STOXX 600 index slipped 0.5%.

Global crude oil prices hovered at about $101 per barrel on Thursday morning, which marked a 9% increase from a day earlier. Since a month ago, oil prices have soared 49%.

In recent days, President Donald Trump has voiced mixed messages about how the White House may address oil prices and related cost woes.

Trump has indicated the war may end soon, but he has also threatened to escalate the conflict if Iran continues to impede tanker traffic in the Strait of Hormuz.

In a social media post on Thursday morning, Trump downplayed the rising oil prices, saying they would financially benefit the U.S.

"The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money. BUT, of far greater interest and importance to me, as President, is stoping an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World," Trump said.

In his first purported message, Mojtaba Khamenei, the newly installed supreme leader of Iran, on Thursday addressed the importance of the Strait of Hormuz.

Khamenei said the closure of the shipping route must be sustained as a "tool to pressure the enemy," according to CNBC.

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

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(NEW YORK) -- Inflation held steady in February, maintaining price increases at elevated levels in the weeks before the U.S.-Israeli war with Iran sent gasoline prices surging and stoked heightened concern about affordability. The reading matched economists' expectations.

Prices rose 2.4% in February compared to a year earlier, leaving the inflation rate unchanged from January, U.S. Bureau of Labor Statistics data showed. Inflation stands slightly higher than the Federal Reserve's target rate of 2%.

Oil prices have surged since the war with Iran late last month, ratcheting up costs for gasoline and airfare, and threatening to push up prices for a vast array of goods reliant on diesel-fuel transport, some analysts previously told ABC News.

Fuel prices rose in February as traders anticipated the possible outbreak of war with Iran, government data showed. Gasoline prices climbed more than 3% in February from a month earlier, according to the inflation report.

Food prices climbed 3.1% in February compared to a year earlier, registering above overall inflation and maintaining their pace from the previous month.

A lackluster jobs report last week showed the U.S. economy lost 92,000 jobs in February, which marked a reversal of fortunes for the labor market and erased most of the job gains recorded in 2026.

The unemployment rate ticked up from 4.3% in January to 4.4% in February, the BLS said. Unemployment remains low by historical standards.

Sluggish hiring has coincided with elevated inflation, threatening a period of "stagflation.”

Those economic headwinds helped set the conditions before the outbreak of war with Iran, which spiked oil prices and risked price increases for a host of diesel-fuel transported goods.

U.S. crude oil prices hovered at about $86 per barrel on Tuesday, surging more than 30% since a month earlier.

The average price of a gallon of gasoline in the U.S. soared to $3.53 on Tuesday from $2.92 a month prior, AAA data showed.

Still, the overall economic picture remains mixed.

A government report in February on gross domestic product (GDP) showed the economy grew at a tepid annualized pace of 1.4% over the final three months of 2025. That reading indicated a dramatic cooldown from the strong annualized growth of 4.4% recorded in the previous quarter, U.S. Commerce Department data showed.

The Iran war threatens to slow U.S. economic growth since oil-driven price increases could weigh on consumers and businesses, analysts previously told ABC News.

The potential combination of higher inflation and slower growth could also pose a challenge for the Fed, putting pressure on both sides of its dual mandate to manage prices and maintain maximum employment.

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 risks a cooldown of economic performance.

The central bank held interest rates steady at its most recent meeting in January, ending a string of three consecutive quarter-point rate cuts. Policymakers will make their next interest-rate decision on March 18.

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(NEW YORK) -- Stocks closed higher on Monday, recovering from sharp losses earlier in the day as markets whipsawed in response to developments in the U.S.-Israeli war with Iran.

The dramatic reversal on Wall Street came after U.S. oil prices turned lower on Monday afternoon. Crude prices settled at about $85 per barrel, unwinding a surge hours earlier that had reached as high as nearly $120 a barrel.

The Dow Jones Industrial Average closed up 230 points, or 0.4%, while the S&P 500 jumped 0.8%. The tech-heavy Nasdaq increased 1.3%.

The Dow had fallen as much as 750 points on Monday morning, before reversing those losses in the afternoon.

Oil prices fell into the red and stocks raced into the green after comments made by President Donald Trump to a CBS reporter, who posted on X that the president had said "the war is very complete, pretty much."

Crude markets began to calm on Monday morning amid a meeting of the Group of Seven (G7) finance ministers about a possible coordinated release from their respective strategic petroleum reserves.

The G7 announced on Monday its decision to forego a release of reserve oil at this time, but traders appeared to view the group as willing to take such action.

Still, indexes fell worldwide on Monday as the jump in oil prices rippled through global markets. Tokyo's Nikkei 225 index plunged 5.2%, while pan-European STOXX 600 index slipped 0.6%.

U.S. crude oil prices hovered at about $85 per barrel on Monday afternoon, which marked a roughly 6% decline from a day earlier. Since a month ago, however, oil prices have soared 34%.

The average price of a gallon of gasoline in the U.S. soared to $3.47 on Monday from $2.99 a week earlier, AAA said.

In a social media post on Sunday night, President Donald Trump downplayed the rise in oil prices.

"Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!" Trump said.

Soon after the war with Iran began on Feb. 28, U.S.-Israeli forces killed Supreme Leader Ayatollah Ali Khamenei in Tehran. His son Mojtaba Khamenei was chosen on Sunday to succeed him.

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(NEW YORK) -- Artificial-intelligence firm Anthropic sued the Trump administration on Monday over the Pentagon's choice to designate it a "supply-chain risk," legal filings show.

A spokesperson for Anthropic said the legal action "does not change our longstanding commitment to harnessing AI to protect our national security, but this is a necessary step to protect our business, our customers, and our partners."

A Department of Defense spokesperson told ABC News: "As a matter of Department of War policy, we do not comment on litigation."

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

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(NEW YORK) -- The Dow Jones Industrial Average closed down 450 points on Friday as the Iran war continued to spike oil prices.

The Dow fell 453 points, or 0.9%, while the S&P 500 dropped 1.3%. The tech-heavy Nasdaq declined 1.5%.

In a post on social media on Friday morning, President Donald Trump appeared to rule out a compromise with Iran.

Trump said there would be "no deal with Iran except UNCONDITIONAL SURRENDER!"

Oil prices soared as traders feared a prolonged blockade of the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of the global oil supply.

U.S. crude oil prices topped $90 on Friday, marking a staggering 35% increase from a week earlier.

The stock selloff on Friday extended losses from a day earlier, when the Dow closed down 785 points.

Alongside fallout from the Middle East conflict, a jobs report on Friday showed the U.S. economy unexpectedly lost jobs in February, marking a reversal of fortunes for the labor market.

The unemployment rate ticked up from 4.3% in January to 4.4% in February, the BLS said. Unemployment remains low by historical standards.

The Iran war threatens to slow U.S. economic growth since oil-driven price increases could weigh on consumers and businesses, analysts previously told ABC News.

The potential combination of higher inflation and slower growth could also pose a challenge for the Fed, putting pressure on both sides of its dual mandate to manage prices and maintain maximum employment.

The central bank held interest rates steady at its most recent meeting in January, ending a string of three consecutive quarter-point rate cuts.

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(NEW YORK) -- The U.S. economy lost jobs in February, marking a major reversal of fortunes for the labor market and nearly erasing all of the job gains delivered a month earlier, government data on Friday showed. The reading came in well below economists' expectations.

The U.S. lost 92,000 jobs in February, according to the report from the U.S. Bureau of Labor Statistics (BLS), which marked a significant dropoff from 130,000 jobs added in the previous month.

The unemployment rate ticked up from 4.3% in January to 4.4% in February, the BLS said. Unemployment remains low by historical standards.

The new jobs report arrived as markets roil and gasoline prices surge in response to the war with Iran. The Middle East conflict cast fresh uncertainty over the economic outlook.

A hiring cooldown last year prompted interest rate cuts at the Federal Reserve and concern among some observers about the nation's economic prospects. The U.S. added an average of about 15,000 jobs per month in 2025, U.S. Bureau of Labor Statistics data showed.

Sluggish hiring has coincided with elevated inflation, threatening a period of "stagflation."

Those economic headwinds helped set the conditions before the outbreak of war with Iran, which spiked oil prices and risked price increases for a host of diesel-fuel transported goods.

The Dow Jones Industrial Average plunged 785 points on Thursday as U.S. crude prices rose to their highest level since June.

Still, the overall economic picture remains mixed.

A government report in February on gross domestic product (GDP) showed the economy grew at a tepid annualized pace of 1.4% over the final three months of 2025. That reading indicated a dramatic cooldown from the strong annualized growth of 4.4% recorded in the previous quarter, U.S. Commerce Department data showed.

Price increases, meanwhile, have softened. In January, inflation fell to 2.4%, its lowest level in nine months. It remains slightly higher than the Federal Reserve's target rate of 2%.

The Iran war threatens to slow U.S. economic growth since oil-driven price increases could weigh on consumers and businesses, analysts previously told ABC News.

The potential combination of higher inflation and slower growth could also pose a challenge for the Fed, putting pressure on both sides of its dual mandate to manage prices and maintain maximum employment.

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 risks a cooldown of economic performance.

The central bank held interest rates steady at its most recent meeting in January, ending a string of three consecutive quarter-point rate cuts. Policymakers will make their next interest-rate decision on March 18.

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(NEW YORK) -- The Dow Jones Industrial Average plunged 900 points on Thursday as the war with Iran escalated and oil prices continued to climb.

The Dow fell 908 points, or 1.8%, while S&P 500 dropped 1%. The tech-heavy Nasdaq declined 0.9%.

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

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(NEW YORK) -- The Dow Jones Industrial Average plunged more than 1,000 points in early trading on Tuesday as the ongoing U.S.-Israeli war with Iran prompted a major selloff.

The Dow fell 1,075 points, or 2.2%, while the S&P 500 dropped 2%. The tech-heavy Nasdaq plummeted 2%.

Investor reaction on Tuesday sharply departed from the muted response a day earlier, when the major indexes closed essentially flat.

Oil prices, meanwhile, spiked for the second consecutive day as traders feared a prolonged blockade of the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of global oil supply.

The national average price of gasoline in the U.S. soared about 11 cents overnight to $3.11, AAA said on Tuesday.

President Donald Trump announced "major combat operations" against Iran on Saturday, with daytime strikes in the joint U.S.-Israel attack targeting military and government sites, officials said.

On Sunday, Iranian state television confirmed that Ayatollah Ali Khamenei was among those killed by airstrikes in Tehran.

Iran is responding to the U.S.-Israeli operation with missile and drone attacks targeting Israel, regional U.S. bases and Gulf nations. American diplomatic facilities have also been attacked.

U.S. Treasury yields ticked higher on Tuesday, suggesting possible concern about economic instability and inflation stemming from the Iran War.

Since bonds pay a given investor a fixed amount each year, the specter of inflation risks higher prices that would eat away at those annual payouts.

In turn, bonds often become less attractive in response to economic turmoil. When demand falls, bond yields rise.

ABC News' Jon Haworth, Jack Moore, Nadine El-Bawab, David Brennan, Kevin Shalvey, Meredith Deliso and Leah Sarnoff contributed to this report.

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(NEW YORK) -- Stocks slid on Monday morning in the first trading session after the U.S.-Israeli attack on Iran over the weekend.

The Dow Jones Industrial Average fell 280 points, or 0.5%, while the S&P 500 dropped 0.5%. The tech-heavy Nasdaq declined 0.5%.

The strikes early Saturday morning prompted Iranian drone attacks and missile fire targeting U.S. military bases and Gulf countries. Tit-for-tat strikes rapidly widened into a regional war.

Four U.S. service members have been killed in action, U.S. Central Command said on Monday. At least 555 people have been killed in the U.S.-Israeli strikes on Iran, the Iranian Red Crescent Society said.

Oil prices spiked on Monday amid fears of a prolonged disruption of the Strait of Hormuz, a trading route that facilitates the transport of about one-fifth of global oil supply. Iran asserts control over the passage of tankers through the strait.

Brent crude prices soared more than 7%, threatening to push up prices for auto fuel and hike transport costs for other goods.

An array of global stock exchanges suffered marked losses on Monday.

In Europe, the pan-continental STOXX 600 index tumbled 1.6%. Tokyo's Nikkei 225 index slipped 1.3%, while South Korea's KOSPI dropped 1%.

Angelo Kourkafas, a senior global strategist for investment strategy at Edward Jones, on Monday acknowledged the volatility in markets but downplayed the long-term risk.

"While the situation remains dynamic, both historical patterns and market fundamentals offer some reassurance," Kourkafas said in a statement to ABC News. "Geopolitical flare ups can create short term volatility, but recent episodes have produced limited and short lived market impacts."

The CBOE Volatility Index (VIX), a measure of anticipated market volatility, climbed more than 7% on Monday.

President Donald Trump announced "major combat operations" against Iran on Saturday, with daytime strikes in the joint U.S.-Israel attack targeting military and government sites, officials said.

On Sunday, Iranian state television confirmed that Ayatollah Ali Khamenei was among those killed by airstrikes in Tehran on Saturday.

Iran is responding to the U.S.-Israeli operation with missile and drone attacks targeting Israel, regional U.S. bases and Gulf nations.

Israel is also intensifying its long-running strike campaign in Lebanon following fresh attacks by the Iranian-aligned Hezbollah militia.

In remarks on Monday, Iranian and American officials signaled expectations of an extended conflict.

The secretary of Iran's Supreme National Security Council, Ali Larijani, said that Iran is prepared for a long war.

"Iran, unlike the United States, has prepared itself for a long war," Larijani wrote in a post on X on Monday. He added that Iranian armed forces "have not engaged in any attacks except in defense."

Gen. Dan Caine, the chairman of the Joint Chiefs of Staff, did not specify a timeline, but said, "This is not a single overnight operation. The military objectives … will take some time to achieve.”

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(NEW YORK) -- The U.S. and Israel's large-scale strikes on Iran Saturday are expected to rattle oil markets when trading resumes Sunday evening, with analysts anticipating an immediate price reaction and impact on gas prices.

The central concern isn't just Iran's oil production, but its influence over the Strait of Hormuz, one of the world’s most important checkpoints for oil.

According to the U.S. Energy Information Administration, roughly 20% of the world's oil passes through the strait, making Iran’s threats to close the waterway a significant risk. The U.S. is trying to control for this situation by vowing to "annihilate" Iran's navy. 

Saudi Arabia and the United Arab Emirates have limited infrastructure in place that can bypass the Strait of Hormuz, which has the potential to mitigate any transit disruptions, but not offset them entirely.

While Iran has never followed through on these threats in the past, the perception of risk is still enough to move markets.

GasBuddy’s Patrick DeHaan expects crude oil to jump 5-10% as markets reopen, pushing oil above $70 a barrel.

While this would be much less dramatic than the response to the start of the Russia-Ukraine war in 2022, which drove prices above $100 a barrel, it would still move the average price of gas to above $3 a gallon for the first time this year.

DeHaan noted that gasoline and diesel prices in the U.S will not skyrocket overnight, and the actual impact will depend on the intensity and duration of the conflict.

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(NEW YORK) -- The rate on a 30-year fixed mortgage dropped below 6% for the first time in nearly four years, according to new data from Freddie Mac.

Rates have been hovering around 6% this year and averaged 6.76% last February.

"For the first time in three and a half years, the 30-year fixed-rate mortgage dropped into the 5% range, falling even lower than last week's milestone,” Sam Khater, Freddie Mac’s chief economist, said in a statement. "This rate, combined with the improving availability of homes for sale, is meaningful and will drive more potential buyers into the market for spring homebuying season.”

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

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(NEW YORK) -- President Donald Trump rushed to enact new tariffs and vowed to preserve others after a recent Supreme Court ruling knocked out most of his levies.

Businesses and consumers now face a different set of tariffs, which amount to taxes paid by importers for goods shipped into the U.S. Oftentimes, importers pass along tariff-related costs to consumers, raising retail prices.

The nation's overall tariff rate has dropped, meaning some products have gained relief from tariff-related price pressures, some analysts told ABC News. But levies remain in place for nearly all imported goods, including duties as high as 50%, hiking costs for some companies and shoppers, they added.

"In general, we've seen tariffs pushing up on prices. That won't go away," Jason Miller, a professor of supply chain management at Michigan State University, told ABC News.

The high court ruled on Friday that the International Emergency Economic Powers Act (IEPPA) does not authorize Trump to impose levies, nullifying 70% of Trump's tariffs after they collected more than $140 billion through December, the Yale Budget Lab found.

During his State of the Union speech on Tuesday, Trump criticized the Supreme Court decision, describing at as a "very unfortunate ruling," and asserting that he retains the ability to impose tariffs under "fully approved and tested alternative legal statutes."

In a social media post on Monday, Trump affirmed what he said was his authority to issue tariffs, saying he does not need to consult Congress before erecting new trade levies.

Trump also reiterated his commitment to his policy approach, warning other countries that they may face a "much higher Tariff, and worse."

A 10% global tariff took effect on Tuesday, marking the first duty enacted by Trump since the high court's decision. Trump issued the levy under Section 122 of the Trade Act of 1974, which allows the president to hike tariffs for 150 days as means of addressing "large and serious" balance-of-payments deficits, or disparities between a country's total payments in transactions with other nations and its total earnings. In order to extend the Section 122 tariffs beyond 150 days, Trump would need to secure congressional approval.

Senate Minority Leader Chuck Schumer, D-N.Y., said this week that Democrats would oppose an extension of Section 122 tariffs, which could deny Trump the 60 votes necessary to overcome a potential Senate filibuster.

Trump has vowed to hike the Section 122 tariff to 15%. As of Tuesday, however, the president had not issued an order formalizing that increase.

A 15% Section 122 tariff would result in price increases amounting to $800 in additional costs for an average U.S. household over the next 150 days, the Yale Budget Lab projected.

"That's hundreds of dollars that you're going to be paying as a result of these tariffs," Raymond Robertson, professor for trade, economics and public policy at Texas A&M University, told ABC News.

Robertson noted the ultimate cost impact may be slightly lower than projected as consumers shift away from products that display noticeable tariff-induced price hikes. But, he added, tariff-impacted products will be all but impossible for shoppers to avoid.

"These tariffs are hitting across the board," Robertson said.

The Trump administration also plans to maintain sector-specific tariffs imposed under Section 232 of the Trade Expansion Act of 1962 and conclude pending investigations that could authorize additional levies, U.S. Trade Representative Jamieson Greer said in a statement on Friday.

That statute permits the White House to levy tariffs on products of importance to national security. Under the law, the White House must await the result of an investigation undertaken by the Commerce Department before imposing a tariff.

Under Section 232, for instance, steel and aluminum face a 50% tariff, putting upward pressure on prices for tableware, motorcycles, canned goods and assorted children's products, analysts previously told ABC News.

A 50% tariff also applies to some copper products, while 25% tariffs remain for cars and auto parts. Those levies exclude a host of goods compliant with the United States-Mexico-Canada Agreement, or USMCA, a free trade agreement.

To be sure, some products will experience a reduction of tariffs in the aftermath of the Supreme Court decision. Products from China, Brazil, Vietnam and India will likely gain notable tariff relief, since those nations faced significant tariffs under the legal authority that was struck down by the Supreme Court, Miller said.

Electronics and clothing are among the products that could benefit from softer tariffs.

If the Supreme Court had opted to uphold tariffs issued under IEPPA, the nation's effective tariff rate would have remained at 16%, the Yale Budget Lab said. Taking into account Section 122 tariffs, the effective tariff rate now stands at 13.7%, the group said.

"The good news for consumers is there's an overall decrease in tariff rates," Miller said. "What creates a challenge is we don't know exactly what the new landscape will look like."

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(NEW YORK) -- A 10% global tariff took effect on Tuesday, marking the first duty enacted by President Donald Trump after a recent Supreme Court decision invalidated most of his levies.

Within hours of the high court's ruling on Friday, Trump signed an executive order imposing a 10% tariff on nearly all imports for up to 150 days. The directive called for enforcement of the duty to begin at 12:01 a.m. ET on Tuesday, Feb. 24.

Soon after signing the order, Trump vowed to hike the global tariff to 15%. As of Tuesday, however, the president had not issued an executive order formalizing that increase.

Stocks ticked higher Tuesday morning, recovering some of the losses suffered a day earlier in the first trading session since Trump announced the tariff increase.

Trump enacted the 10% tariff under Section 122 of the Trade Act of 1974, which allows the White House to address "large and serious" balance-of-payments deficits, or disparities between a country's total payments in transactions with other nations and its total earnings.

Under the measure, the president can also impose levies to "prevent an imminent and significant depreciation of the dollar."

The Section 122 tariffs will result in price increases amounting to $800 in additional costs for an average U.S. household over the next 150 days, the Yale Budget Lab projected. In order to extend the across-the-board 15% tariff beyond that time window, Trump would need to secure Congressional approval.

Senate Minority Leader Chuck Schumer, D-N.Y., said Monday that Democrats would oppose an extension of Section 122 tariffs, which could deny Trump the 60 votes necessary to overcome a potential Senate filibuster.

In a social media post on Monday, Trump affirmed what he said was his authority to issue tariffs, saying he does not need to consult Congress before erecting new trade levies.

Trump also reiterated his commitment to his policy approach, warning other countries that they may face a “much higher Tariff, and worse.”

The high court ruled in their February 20 decision that the International Emergency Economic Powers Act (IEPPA) does not authorize Trump to impose levies, nullifying a major swathe of tariffs issued by the president on April 2 of last year, which he dubbed "Liberation Day," and a host of other measures.

If the Supreme Court had opted to uphold tariffs issued under IEPPA, the nation's effective tariff rate would have remained at 16%, the Yale Budget Lab said. Taking into account the Section 122 tariffs, the effective tariff rate now stands at 13.7%, the group said.

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(NEW YORK) -- Stocks slid on Monday morning in the first trading session since President Donald Trump announced a new 15% tariff on most imported goods, intensifying his effort to impose levies that were struck down by the Supreme Court.

The Dow Jones Industrial Average fell 90 points, or 0.1%, while the S&P 500 dropped 0.1%. The tech-heavy Nasdaq declined 0.1%.

Cryptocurrency prices tumbled in early trading on Monday. The price of bitcoin fell nearly 2%, putting it at about $66,075.

Gold prices jumped to their highest level in three weeks as investors sought the safe-heaven asset amid heightened uncertainty.

In a social media post on Monday, Trump reiterated his criticism of the Supreme Court.

The Supreme Court, Trump said, "accidentally and unwittingly gave me, as President of the United States, far more powers and strength than I had prior."

Trump retains the power to levy a 15% tariff for up to 150 days under the Trade Act of 1974, which allows the president to address trade disparities with other countries.

Hours after the Supreme Court ruling on Friday, Trump said he would sign an executive order enacting a new 10% "global tariff," invoking authority under Section 122. On Saturday, Trump escalated the tariff to 15%.

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

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(NEW YORK) -- The U.S. economy slowed more than expected over the final months of 2025, federal government data on Friday showed.

The economy grew at an annualized rate of 1.4% in the fourth quarter in the government's initial estimate, marking a cooldown from blistering-hot 4.4% growth recorded in the previous quarter.

The slowdown at the end of last year stemmed in part from a decline in the pace of consumer spending, the U.S. Commerce Department said.

The GDP report marks the latest distress signal for U.S. shoppers, who account for about two-thirds of the nation's economic activity.

Retail sales data last week showed flat performance in December, suggesting possible weakness for shoppers during the holiday season. Meanwhile, credit card debt levels have climbed and consumer sentiment has remained glum.

The fresh reading of gross domestic product on Friday provided a key measure of the country's economic health as policymakers continued to grapple with an ongoing bout of elevated inflation and sluggish hiring.

Inflation cooled in January, dropping price increases to their lowest level in nine months. While the pullback defied fears of a tariff-induced rise in overall costs, inflation continued to hover above the Federal Reserve's target rate of 2%.

Meanwhile, a recent jobs report showed stronger-than-expected hiring in January, even though an updated estimate released at the same time indicated a near-paralysis of the labor market last year.

A boost in consumer spending helped propel the surge in GDP over three months ending in September, the U.S. Commerce Department previously said.

Over the past year, hiring has slowed dramatically while inflation has remained elevated, risking an economic double-whammy known as "stagflation." Those conditions have put the Federal Reserve in a difficult position.

The central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.

The strain on both sides of the Fed's mandate presents a "challenging situation" for the central bank, Fed Chair Jerome Powell said in December.

The Fed held interest rates steady at its most recent meeting in January, ending a string of three consecutive quarter-point rate cuts.

Futures markets expect two quarter-point interest rate cuts this year, forecasting the first in June and a second in the fall, according to the CME FedWatch Tool, a measure of market sentiment.

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(WASHINGTON) -- Mark Zuckerberg took the stand on Wednesday in a landmark Los Angeles trial alleging that major social media platforms were intentionally designed to be addictive for children and teens.

The case, which began last Monday in Los Angeles County Superior Court, centers on claims against Meta -- the parent company of Facebook and Instagram -- and YouTube, which is owned by Google. Plaintiffs argue the companies knowingly built features that encouraged compulsive use among young users, contributing to long-term mental health harm.

The lawsuit was brought by a now-20-year-old woman identified as "Kaley" and her mother, who allege she was exposed to addictive design features as a child. Her lawyers claim she got hooked on social media apps starting as young as age 6. She says features like auto-scrolling got her addicted to the platforms -- ultimately leading to anxiety, depression and body image issues.

In his opening questions to Zuckerberg, Kaley’s attorney Mark Lanier asked if a company should "take advantage" of vulnerable people.

"I think a reasonable company should try and help the people who try and use its services," Zuckerberg said.

In tense exchanges in court, Zuckerberg admitted it is difficult for Meta to enforce age restrictions on Instagram.

Instagram’s policy states that children under age 13 are unable to create accounts. The plaintiff’s lawyer says Kaley started using the app at age 10, before those new restrictions were put in place.

"I always wish we would have gotten there sooner, but I think we're in a better place," Zuckerberg said.

Lanier also pressed Zuckerberg on alleged internal documents from Instagram head Adam Mosseri in 2022. In the documents, Mosseri said the evidence shows Instagram’s “primary goal” is to ensure people stay engaged with the app, especially among teens.

The attorney also submitted into evidence an email from Zuckerberg in 2016 claiming they aimed to increase time spent on apps by 12% over three years.

Zuckerberg acknowledged the company had previously established those goals but said “we changed that.”

Earlier in the testimony, Lanier questioned Zuckerberg over hisspeaking style and media training.

"I'm well known for being pretty bad at this," Zuckerberg said.

The case is the first of more than 1,500 similar lawsuits nationwide to go before a jury, potentially setting a precedent for how tech companies are held liable for product design.

Zuckerberg has appeared before Congress multiple times to address concerns over youth safety and online harms, but Wednesday marks the first time he will testify before a jury on these claims.

Several parents of children who died by suicide or accidental harm linked to online trends are expected to attend the proceedings. Some previously watched Zuckerberg apologize during a 2024 Capitol Hill hearing, where he acknowledged families who said social media contributed to their children’s deaths.

The companies deny the allegations, arguing that mental health outcomes are shaped by a range of factors beyond social media use. They say they have implemented safeguards aimed at protecting young users, including parental controls and accounts designed specifically for teens.

In a statement to ABC News at the start of the trial, a Meta spokesperson said, "We strongly disagree with these allegations and are confident the evidence will show our longstanding commitment to supporting young people." 

Meta said that the company has made "meaningful changes" to its services, such as introducing accounts specifically for teenage users.

Zuckerberg's appearance follows testimony last week from Mosseri, who disputed characterizing Instagram use as an "addiction," while acknowledging what he described as "problematic use."

Mosseri testified that there's always a tradeoff between "safety and speech," saying users don't like it when they remove options from Instagram. 

The Los Angeles trial is part of a broader wave of litigation targeting social media companies. Meta is also facing a separate child safety lawsuit in New Mexico, while lawsuits brought by school districts -- modeled after tobacco litigation in the 1990s -- are expected to head to trial later this year.

Social platforms Snapchat and TikTok were previously named in the lawsuit but reached settlements with the plaintiffs last month.

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(LOS ANGELES) -- A landmark trial over social media addiction has drawn fresh scrutiny to a decades-old legal shield: Section 230.

The case, which began last Monday in Los Angeles County Superior Court, centers on claims against Meta -- the parent company of Facebook and Instagram -- and YouTube, which is owned by Google. Plaintiffs argue the companies knowingly built features that encouraged compulsive use among young users, contributing to long-term mental health harm.

The case is the first of more than 1,500 similar lawsuits nationwide to go before a jury, potentially setting a precedent for how tech companies could be held liable for product design. Meta CEO Mark Zuckerberg is testifying in the case on Wednesday.

The companies deny the allegations, arguing that mental health outcomes are shaped by a range of factors beyond social media use. They say they have implemented safeguards aimed at protecting young users, including parental controls and accounts designed specifically for teens.

In a statement to ABC News at the start of the trial, a Meta spokesperson said, "We strongly disagree with these allegations and are confident the evidence will show our longstanding commitment to supporting young people."

Meta said that the company has made "meaningful changes" to its services, such as introducing accounts specifically for teenage users.

The tech giants are expected to challenge the plaintiff's argument that there is a direct link between social media use and mental health issues. They may also invoke legal protection long-afforded by Section 230.

Section 230 of the 1996 Communications Decency Act protects social media platforms and other sites from legal liability that could result from content posted by users because they are not deemed to be publishers.

Plaintiffs have sought to circumvent that legal immunity in part by arguing that the platforms are addictive, which amounts to a defect in a product.

Section 230 grants broad protection for internet platforms, saying: "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

Some tech giants, like Meta and Google, have supported reform of Section 230 that would raise the standard that platforms would need to meet in order to qualify for immunity. But the companies largely support preserving the law in some form to protect them from legal liability tied to user-generated content.

Section 230 has garnered backing from some free-speech advocacy groups such as the Electronic Frontier Foundation (EFF). The measure "​​protects internet users' speech by protecting the online intermediaries we rely on," EFF said in a blog post last week, praising Section 230 as "the legal support that sustains the internet as we know it."

In 2023, the Supreme Court issued a pair of rulings that upheld Section 230, rejecting challenges from users alleging that harm had resulted from online posts.

One of the cases, Gonzalez v. Google LLC, concerned a lawsuit brought by the family of Nohemi Gonzalez, an American woman who was killed in an ISIS terrorist attack in Paris in 2015. The lawsuit against Google, the parent company of YouTube, alleged that YouTube recommended ISIS recruitment videos to users. The high court ruled against the plaintiffs.

Many Democrats argue that Section 230 allows platforms to evade accountability for allegedly permitting harmful or misleading content, claiming the rule lets platforms off the hook for policing too little speech.

Republicans have taken issue with what they consider big tech censorship, saying the legal protection allows the platforms to police too much speech without facing consequences.

In December, Sen. Dick Durbin, D-Ill., and Lindsey Graham, R-S.C., introduced the Sunset Section 230 Act, which would remove the legal protection from federal law within two years. A bipartisan group of seven senators has signed onto the bill but it remains well short of a majority.

ABC News' Shafiq Najib contributed to this report.

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(NEW YORK) -- A thaw in the housing market may deliver relief for homebuyers left out in the cold over recent years, analysts told ABC News.

After the pandemic, a rapid rise in home prices coincided with stubbornly high mortgage rates, shutting out potential buyers.

Glimmers of hope have started to emerge, however. Mortgage rates are falling, wages are rising faster than home prices and homebuyers are scooping up their biggest discounts in years, some analysts told ABC News.

"Housing is becoming more affordable. Are we there yet? No. But we're on the right path," Ken Johnson, a real estate economist at the University of Mississippi, told ABC News.

The average interest rate on a 30-year fixed mortgage stands at 6.09%, Freddie Mac data last week showed. A little more than a year ago, the average 30-year fixed mortgage rate exceeded 7%.

Each percentage point decrease in a mortgage rate can save thousands or tens of thousands in additional costs each year, depending on the price of the house, according to Rocket Mortgage.

"It looks like mortgage rates are settling down," Lawrence Yun, chief economist at the National Association of Realtors (NAR), told ABC News. "That's great news for homebuyers."

A measure of housing affordability issued by NAR has improved for seven consecutive months, rising to its highest level since 2022, Yun said. The surge in home prices has slowed while income gains have accelerated, bolstering the purchasing power of homebuyers, some analysts noted.

"Incomes are growing faster than home prices," Johnson said.

Despite these positive signals, the housing market still faces significant challenges, some analysts said, pointing to a fundamental shortage of housing supply.

The housing market is suffering from a phenomenon known as the "lock-in" effect, Lu Liu, a professor at the Wharton School at the University of Pennsylvania, told ABC News.

While mortgage rates have fallen, they remain well above the rates enjoyed by most current homeowners, who may be reluctant to put their homes on the market and risk a much higher rate on their next mortgage.

"The degree of lock-in is unprecedented in the U.S.," Liu said, noting the prevalence of 30-year mortgages and the inability for homeowners to transfer a current loan to a new property.

Existing home sales declined by 8.4% in January from the previous month, the NAR said in a report last week.

Alongside the lock-in effect, construction has failed to make up for a years-long shortage of new homes, exacerbating the shortfall.

While the lock-in effect remains a significant factor, its impact may be waning as some home owners encounter major life events or other circumstances that force them to move, even if it entails taking on a loan with a higher mortgage rate, Liu said.

"If they really do have to move, maybe they would be more willing to yield to this economic logic," Liu added.

If homebuyers do move forward with a purchase, they may benefit from major price discounts, Redfin found this month. In 2025, homebuyers received average discounts that amount to 7.9% off a home's initial listing price, Redfin said, making it the largest average discount in 13 years.

"Homebuyers are more likely to get discounts than they were in recent years because it's the strongest buyer's market in recent history," said Lily Katz and Asad Khan, co-authors of the Redfin report.

Positive signals for homebuyers will likely continue as elevated mortgage rates weigh on consumer demand, slowing the rise in prices, some analysts said. But, they cautioned, an unexpected spike in mortgage rates could hike borrowing costs for homebuyers or an economic slowdown may crimp purchasing power.

"There is uncertainty over the outlook for interest rates," Liu said. "So the overall price outlook is uncertain."

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(NEW YORK) -- Valentine's Day shoppers may feel jilted by runaway chocolate prices.

Chocolate prices soared 14.4% over the initial weeks of 2026 when compared to the same period a year earlier, nearly doubling the pace of price increases at the start of 2025, according to findings shared with ABC News by intelligence firm Datasembly.

The sharp rise in chocolate prices owes to a cocoa shortage caused primarily by adverse weather and crop disease in West Africa, which accounts for about 70% of the world’s cocoa, some analysts told ABC News.

The dearth of cocoa, analysts said, has ratcheted up input costs for chocolate makers and vaulted retail prices, leading to sticker shock in grocery and candy store aisles.

“There is a record gap between supply and demand,” David Branch, sector manager at the Wells Fargo Agri-Food Institute, told ABC News.

Raw cocoa bean prices have risen dramatically in recent years due to the choke in supply. A metric ton of cocoa beans cost as much $12,000 last year, Branch said. Before the COVID-19 pandemic, cocoa bean prices hovered between $2,000 and $2,500 per metric ton, International Monetary Fund data shows.

In recent months, supply problems have begun to ease, bringing cocoa bean costs down significantly from last year’s peak. A metric ton of cocoa beans now runs about $3,700.

Still, chocolate prices remain highly elevated as chocolate makers sell through candy made with cocoa beans bought earlier, analysts said.

“A lot of manufacturers bought cocoa when prices were high and that’s still very much moving through the supply chain,” David Ortega, a food economist at Michigan State University, told ABC News.

In November, the White House announced framework trade agreements with some Latin American countries in an attempt to ease surging prices for grocery staples such as cocoa. While the U.S. imports a significant share of cocoa from West Africa, supply also comes from Latin American countries like Ecuador, the U.S. Department of Agriculture says.

“Today’s announcements underscore the Administration’s unwavering commitment to fair and balanced trade at every opportunity to protect and strengthen our economic and national security,” the White House said when it unveiled the framework agreements.

Prices remain high for some other imported food items, such as coffee and beef.

Coffee prices surged about 18% in January compared to a year earlier, while ground beef prices climbed more than 17% over that span, Bureau of Labor Statistics data on Friday showed.

Grocery prices are rising at a faster pace than prices overall, climbing 2.9% over the year ending in January, according to BLS data.

Chocolate price hikes will likely ease over the coming months, some analysts said, noting the eventual pass through of lower cocoa prices into the cost of chocolate bought at stores. Analysts emphasized, however, the uncertainty surrounding the outlook due to the chance of weather-related challenges for growers.

Branch, of Wells Fargo, said chocolate prices could even fall by the latter part of this year as manufacturers find cost relief and pass it along to shoppers.

“If market trends stay where they are, we’ll see lower prices for Halloween,” Branch said.

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(NEW YORK) -- nflation cooled in January, dropping price increases to their lowest level in nine months, new data from the Bureau of Labor Statistics showed. The lower-than-expected reading defied fears of a tariff-induced hike in overall costs.

Prices rose 2.4% in January compared to a year earlier, according to the Consumer Price Index.

Inflation stands at its lowest level since May, but it remains nearly a half-percentage point higher than the Fed’s target rate of 2%.

Affordability remains a concern for many Americans as the political calendar turns closer to election season.

White House press secretary Karoline Leavitt touted the inflation report in a post on X on Friday.

The data, Leavitt said, "shows inflation is declining and the economy is moving in the right direction under President Trump."

The data arrived days after fresh hiring figures showed stronger-than-expected job growth in January, even though an updated estimate released at the same time indicated a near-paralysis of the labor market last year.

The murky hiring picture marked the latest in a recent series of mixed signals in economic data, which have left observers uncertain about the potential risk posed by elevated inflation alongside sluggish hiring.

Observers closely watched price movements for some household staples, which have faced sharp increases of late.

Coffee prices surged about 18% in January compared to a year earlier, while ground beef prices climbed more than 17% over that span, Bureau of Labor Statistics data showed.

Grocery prices rose at a faster pace than prices overall, climbing 2.9% over the year ending in January, BLS data showed.

Over the past year, hiring has slowed dramatically while inflation has remained elevated, risking an economic double-whammy known as "stagflation." Those conditions have put the Federal Reserve in a difficult position.

The central bank must balance a dual mandate to keep inflation under control and maximize employment. To address pressure on both of its goals, the Fed primarily holds a single tool: interest rates.

The strain on both sides of the Fed's mandate presents a "challenging situation" for the central bank, Fed Chair Jerome Powell said in December.

The Fed held interest rates steady at its most recent meeting in January, ending a string of three consecutive quarter-point rate cuts.

The benchmark 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.

Futures markets expect two quarter-point interest rate cuts this year, forecasting the first in June and a second in the fall, according to the CME FedWatch Tool, a measure of market sentiment.

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