US Economy Slows and Inflation Jumps, Damping Soft-Landing Hopes

• GDP advances an annualized 1.6%, slower than all projections
• First-quarter core inflation measure accelerates to 3.7% rate

US economic growth slid to an almost two-year low last quarter while inflation jumped to uncomfortable levels, interrupting a run of strong demand and muted price pressures that had fueled optimism for a soft landing.

Gross domestic product increased at a 1.6% annualized rate, below all economists’ forecasts, the government’s initial estimate showed. The economy’s main growth engine — personal spending — rose at a slower-than-forecast 2.5% pace. A wider trade deficit subtracted the most from growth since 2022.