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The US economy grew at its slowest pace in two years in the first quarter, while prices rose at a faster rate — sending the markets into a tailspin Thursday and clouding President Joe Biden’s sunny outlook for American households heading into his reelection battle.

The data released by the Commerce Department showed that gross domestic product (GDP) grew at an annualized pace of 1.6% during the three-month period ended in March — below the 2.4% projected by economists polled by The Wall Street Journal.

The growth rate was the lowest since 2022 and came in much lower than fourth-quarter GDP, which was revised up to 3.4%, and marked a cooldown from the quarter prior, when it was 4.9%.

More troubling was that prices have remained sticky.

Thursday’s data also showed the personal consumption expenditures (PCE) price index excluding food and energy — a key gauge watched by the Federal Reserve as it weighs whether to cut interest rates — surged at a 3.7% rate in the first quarter, versus the central bank’s 2% target.

Investors and analysts put more weight on the high inflation figure than on signs the economy may finally be cooling, which would generally encourage the Fed to cut rates.

The Dow Jones Industrial Index plunged nearly 700 points after the data was released as investors all but gave up hope on the Fed slashing the 23-year high rates more than one time this year — and most likely not until the fall.

The Dow pared some of the losses, closing down 375 points, or 1%. The S&P 500 was down 0.5%, and the tech-heavy Nasdaq dropped 0.6%.

Data from the CME Group’s FedWatch tool showed the probability of a Fed rate cut in June at 10% odds, with bets on a September cut slipping below 58%, and a second cut in December given less than even odds.

“This report comes in with mixed messages,” said Olu Sonola, head of economic research at Fitch. “If growth continues to slowly decelerate, but inflation strongly takes off again in the wrong direction, the expectation of a Fed interest rate cut in 2024 is starting to look increasingly more out of reach.”

The report on GDP, which represents the value of all goods and services produced within a given period, showed that American consumers remain strong after years of hiring and wage growth. Spending was driven by healthcare, financial services and insurance, which offset a decline in goods, including motor vehicles and gasoline.

Biden attempted to spin the GDP data in his favor, touting that “the economy has grown more since I took office than at this point in any presidential term in the last 25 years.”

Gregory Daco, chief economist at the tax and consulting firm EY, noted that the underlying economy looks solid, though its slowing from last years unexpectedly fast pace.

The rise in imports that accounted for much of the drop in first-quarter growth, he noted, is a sign of solid demand by American consumers for foreign goods.

Still, Daco said that the economys momentum is cooling.

Its unlikely to be a major retrenchment, he said, but we are likely to see cooler economic momentum as a result of consumers exercising more scrutiny with their outlays.

US debt has soared to $33 trillion, the highest ever, with the debt-to-GDP ratio topping 100% — at 123%, per the International Monetary Fund, which projects the ratio to reach 130% by 2035.

The Fed has warned that stubbornly high inflation could persist, especially given the resilience of the labor market, which added a whopping 303,000 positions in March.

Though many of the job gains were reportedly taken by migrants — who have been occupying a growing chunk of the US workforce — a strong labor market historically keeps wages and consumer spending levels elevated, thus fanning inflation and interest rates.

As a result, Wall Street is now widely expecting Fed officials to slash two times by the end of the year — down from the previous forecast that there would be three rate cuts totaling 0.75 percentage points.

“Given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” Fed Chair Jerome Powell said on April 16.

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Utes’ Whittingham reenergized after ’24 free fall

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Utes' Whittingham reenergized after '24 free fall

FRISCO, Texas — A dynamic new quarterback, a new offensive system and two projected first-round picks up front have Utah coach Kyle Whittingham feeling enthusiastic about the Utes’ chances of bouncing back from a disastrous debut season in the Big 12.

Utah was voted No. 1 in the Big 12 preseason poll last year after joining from the Pac-12, but a brutal run of injuries and inconsistency resulted in a seven-game conference losing streak and a 5-7 finish — the program’s first losing season since 2013.

After weeks of contemplation about his future and what was best for the program, Whittingham, the third-longest-tenured head coach in FBS, decided in December to return for his 21st season with the Utes.

“The bottom line and the final analysis was I couldn’t step away on that note,” Whittingham told ESPN at Big 12 media days Wednesday. “It was too frustrating, too disappointing. As much as college football has changed with all the other factors that might pull you away, that was the overriding reason: That’s not us, that’s not who we are. It just left a bad taste in my mouth. I did not want to miss the opportunity to try to get that taste out.”

“The bottom line and the final analysis was I couldn’t step away on that note. It was too frustrating, too disappointing. … That’s not us. That’s not who we are. It just left a bad taste in my mouth. I did not want to miss the opportunity to try to get that taste out.”

Utah coach Kyle Whittingham on going 5-7 in 2024

Whittingham and Utes defensive coordinator Morgan Scalley conducted a national search for a new offensive coordinator and quickly zeroed in on New Mexico‘s Jason Beck. Then they managed to land Devon Dampier, Beck’s first-team All-Mountain West quarterback, via the transfer portal.

After finishing 11th nationally in total offense with 3,934 yards and 31 total touchdowns and putting up the fourth-most rushing yards (1,166) among all FBS starters, Dampier followed his coach to Salt Lake City and immediately asserted himself as a difference-maker for a program that had to start four different QBs in 2024.

“He’s a terrific athlete,” Whittingham said. “He’s a guy that, if spring is any indication, he’s an exciting player, and we can’t wait to watch him this season. … He’s got that ‘it’ factor. He’s a leader. Needless to say, very excited to see what he does for us.”

They’ve surrounded Dampier with 21 more newcomers via the transfer portal and will protect him with two returning starters at tackle in Spencer Fano and Caleb Lomu, who are projected first-round NFL draft picks by ESPN’s Matt Miller.

“We feel they’re the best tandem in the country,” Whittingham said. “The offensive line in general, I feel, it’s the best since I’ve been there. And that’s quite a statement. We’ve had some really good offensive lines. We’ve got two first-rounders and three seniors inside that have played a lot of good football for us. That better be a strength of ours, and that’s what we’re counting on.”

Whittingham has previously said he did not want to coach past the age of 65. Now that he’s 65, he acknowledges that he might’ve arrived at a different decision about his future had the Utes ended up winning the Big 12 in 2024. He is reenergized about getting them back into contention, but he’s not ready to say whether this season might be his last.

“The best answer I can give you is, right now, I’m excited and passionate about going to work every single day,” Whittingham said. “As soon as that changes, I’ll know it’s time. I’m just counting on knowing when the time is right. I can’t tell you exactly what the circumstances will be other than losing the fire in the belly.”

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MLB to utilize ABS challenge system during ASG

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MLB to utilize ABS challenge system during ASG

The automated ball-strike system is coming to the All-Star Game next week in Atlanta.

MLB officials added the feature to the annual exhibition game knowing it could be a precursor to becoming a permanent part of the major leagues as soon as next year.

The same process used this past spring training will be used for the Midsummer Classic: Each team will be given two challenges with the ability to retain them if successful. Only a pitcher, catcher or hitter can ask for a challenge and it has to happen almost immediately after the pitch. The player will tap his hat or helmet indicating to the umpire he wants to challenge while any help from the dugout or other players on the field is not allowed.

MLB officials say 72% of fans who were polled during spring training said the impact of ABS on their experience at the game was a “positive” one. Sixty-nine percent said they’d like it part of the game moving forward. Just 10% expressed negativity toward it.

MLB’s competition committee will meet later this summer to determine if ABS will be instituted next season after the league tested the robotic system throughout the minor leagues and spring training in recent years. Like almost any rule change, there were mixed reviews from players about using ABS but nearly all parties agree on one point: They prefer a challenge system as opposed to the technology calling every pitch.

As was the case in spring training, once a review is initiated, an animated replay of the pitch will be shown on the scoreboard and the home plate umpire will either uphold the call or overturn it. ABS uses Hawk-Eye system technology which tracks the pitch trajectory and location in relation to the strike zone, providing an instant assessment which can be relayed to the home plate umpire.

The All-Star Game will be played at Truist Park in Atlanta on Tuesday.

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Royals sign former Cy Young winner Keuchel

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Royals sign former Cy Young winner Keuchel

The Kansas City Royals have signed former Cy Young Award winner Dallas Keuchel to a minor league contract, the team announced Wednesday.

The 37-year-old left-hander will start at Triple-A Omaha and will earn a prorated $2 million salary if he reaches the big leagues, sources tell ESPN’s Jeff Passan.

Keuchel has not pitched in the majors for nearly a full calendar year. He elected to become a free agent on July 18, 2024, after being designated for assignment by the Milwaukee Brewers.

In four starts with the Brewers last season, Keuchel had a 5.40 ERA in 16 2/3 innings without a decision. In 13 major league seasons, the 2015 American League Cy Young winner with the Houston Astros is 103-92 with a 4.04 ERA in 282 appearances (267 starts).

After pitching his first seven seasons with the Astros, Keuchel has made appearances for six different teams since 2019. He won a World Series with Houston in 2017 and is a two-time All-Star selection and five-time Gold Glove winner.

Information from Field Level Media was used in this report.

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