1.4%: US GDP growth

Corporate profits sink; manufacturing, energy hurt

washington — US economic growth slowed in the fourth quarter, but not as sharply as previously estimated, with fairly strong consumer spending offsetting the drag from efforts by businesses to reduce an inventory overhang.

Gross domestic product increased at a 1.4 per cent annual rate instead of the previously reported one per cent pace, the Commerce Department said on Friday in its third GDP estimate.

GDP growth was initially estimated to have risen at only a 0.7 per cent rate. The economy grew at a rate of two per cent in the third quarter and expanded 2.4 per cent for all of 2015.

Economists polled by Reuters had expected that fourth-quarter GDP growth would be unrevised at a one per cent rate.

Consumer spending, which accounts for more than two thirds of US economic activity, rose at a ries subtracted 0.22 percentage point from GDP growth instead of the previously reported 0.14 percentage point.

First-quarter GDP growth estimates are around a 1.5 per cent rate. But with the inventory pile still large and shipments of capital goods ordered by businesses weak in January and February, the risks to growth are tilted to the downside.

There was some bad news in the GDP report, with corporate profits falling for a second straight quarter as a strong dollar and cheap oil undercut the earnings of multi-national companies.

Profits after tax with inventory valuation and capital consumption adjustments declined at an annual rate of 8.4 per cent, the biggest drop since the first quarter of 2014, after dropping at a 1.7 per cent pace in the third quarter.

Profits from current production fell $159.6 billion after decreasing $33.0 billion in the third quarter.