Washington, D.C., Mar. 25--Spending by consumers and businesses rose a little more in the fourth quarter than earlier estimated, but the government left unchanged its reading on economic growth for the period.
Gross domestic product increased at a 4.1% annual rate, unrevised from an earlier projection and half its torrid 8.2% pace in the third quarter, the Commerce Department reported Thursday.
This final reading on fourth-quarter GDP was on target with economists' forecast for growth of 4.1%, according to a survey by Dow Jones and CNBC.
The government originally estimated GDP grew 4.0% during the fourth quarter; a month ago, it revised up to 4.1%. In all of 2003, the economy grew 3.1%, while advancing 2.2% in 2002 and a paltry 0.5% in 2001.
The GDP report also included a reading on after-tax profits: Corporate earnings increased at a 7.6% annual rate, after rising 10.1% in the third quarter. Profits for all of 2003 climbed 19.2%, compared to a 24.6% increase in 2002.
The Commerce Department raised its estimates on spending by consumers and businesses but lowered its readings on inventory accumulation by companies and government spending.
GDP is a measure of all the goods and services produced in the U.S. A key component of GDP is consumer spending, which accounts for about two-thirds of economic activity.
Spending by consumers rose at a 3.2% annual rate, higher than an earlier estimate of 2.7%.
Consumers' spending on durable goods, items such as cars that are meant to last at least three years, increased 0.7%, after previously being reported as a 0.1% drop. Spending on nondurable goods such as food and clothing rose by 5.4%.
Business spending advanced by 10.9%, higher than the previously estimated 9.6% increase. Equipment and software spending climbed at 14.9%, but nonresidential structures spending skidded 1.4%.
Businesses boosted inventories by $9 billion, less than the $14.9 billion previously estimated. The change in inventories added 0.71 of a percentage point to GDP growth.
Real final sales of domestic product -- GDP less the change in private inventories -- rose at a 3.4% annual rate. Exports increased 20.5% in the fourth quarter, revised down from 21%; imports advanced by an unrevised 16.4%.
Federal government spending increased by 0.7%, less than half the 1.6% earlier estimated. State and local government spending fell 0.5%.
Inflation rose slightly more than previously thought. The price index for gross domestic purchases rose at a 1.3% rate; it was last estimated as climbing 1.1%. The price index for personal consumption went up at a 1.0% rate, higher than the earlier estimate of 0.7%.
