Washington, DC, March 30, 2006--The economy was slightly stronger in the fourth quarter than previously thought. Gross domestic product grew at a 1.7% annualized rate in the quarter, compared with the earlier estimate of 1.6% and an original estimate of 1.1%, according to a Commerce Department report released Thursday. It was the final estimate of quarterly growth.
The economy grew 4.1% in the third quarter.
The results were in line with economists expectations.
Corporate profits increased a record $185.8 billion at a annualized rate in the fourth quarter and were growing at the fastest pace in three years.
The upward revision to GDP was due largely to higher inventory building by businesses, which offset lower consumer spending on services.
Final sales, which excludes inventories, fell 0.2% in the quarter, the weakest performance since the first quarter of 2002. Consumer spending expanded at its weakest pace in 11 years.
Economists expect that the economy grew at a 4.6% in the first quarter, which ends Friday. Growth is then expected to revert to trend growth of about 3.2% in the second quarter.
The gross domestic purchases price index--which includes purchases by consumers, businesses and government, increased 3.7% annualized.
Before-tax corporate profits increased 14.4% to an annual rate of $1.48 billion, or 11.6% of GDP, up from $1.29 billion or 10.3% of GDP in the third quarter.
Profits are up 21.3% in the past year, the fastest profit growth in three years.
