Washington, DC, November 30—The economy grew at a more rapid pace during the summer than the government first believed. Gross domestic product increased during the third quarter at a 3.9% annual rate, faster than the 3.7% pace initially estimated, the Commerce Department said today.
Economists were expecting no change in the 3.7% rate that had been originally reported.
Upward adjustments were made to consumer and business spending and to exports. Inventory investment was lowered.
GDP grew 3.3% in the second quarter and 4.5% in the first. The economy advanced 3.0% in all of 2003.
After-tax corporate profits decreased 2.0% to $884.9 billion in July though September. Profits fell 0.7% in the second quarter. Year over year, third-quarter profits were up 8.1% from the same period 12 months earlier.
Consumer spending climbed 5.1%, up from the 4.6% pace previously reported and higher than the second quarter's 1.6% gain. Purchases of durable goods increased 17.2% and non-durables rose 4.8%; originally, durables were seen as rising 16.8% and non-durables up 3.9%.
Business spending rose 12.9%, up from the initially estimated 11.7% increase. Investment in structures slipped 0.3% and equipment and software shot up 17.2%. Overall business spending rose 12.5% in the second quarter.
Inventory investment by private companies was weaker than first believed.
Businesses expanded their inventories by $35.9 billion, revised down sharply from the originally reported $48.1 billion. The $35.9 billion accumulation lagged the second quarter's $61.1 billion increase in stockpiles. That $25.2 billion quarter-to-quarter change -- the reduction in the increase, that is -- subtracted 0.91 of a percentage point from GDP growth.
Real final sales of domestic product -- that is, GDP less the change in private inventories -- advanced at a 4.9% annual rate. That was higher than the previously estimated 4.2% increase and above the second-quarter's 2.5% growth.
Exports rose by 6.3%, while imports increased by 6.0%. Commerce originally projected exports as rising 5.1% and imports up 7.7%; in the second quarter, exports rose 7.3% and imports climbed 12.6%.
