U.S. 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.

U.S. GDP increased at just a 1.6% annualized rate, well below all economists’ forecasts, the government’s initial estimate showed on Friday. The U.S. 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.

That’s a steep slowdown from Q4 2023’s 3.4% rate and also below the 2.2% rate economists projected. A sharp increase in imports, which subtracts from GDP, contributed to the slowdown in growth from Q4, shaving off nearly an entire percentage point. Spending on imports jumped to a 7.2% rate from 2.2% in the fourth quarter.

A decrease in inventory investment in the private sector also weighed on the U.S. economy earlier this year. There was also a sharp slowdown in government spending.