GDP Growth Is Revised Upward To 4.4% Rate for First Quarter
The U.S. economy grew a little more briskly than originally thought during the first quarter, but the strong upturn in corporate profits of previous quarters showed signs of cooling.</br></br>Gross domestic product, the broadest measure of economic output, increased during the January-March quarter at a 4.4% annual rate, slightly faster than the 4.2% rate originally estimated by the Commerce Department. The GDP estimates released yesterday are based on more data than were available for last month's advance estimates.</br></br>The Commerce Department said inventory restocking and spending by state and local governments were higher in the first quarter than previously thought. Exports and imports were also stronger than thought, but business investment in equipment and software was revised down. The revised annual GDP figure, which fell short of many economists' expectations, marks a slowdown in growth from the second half of 2003 but is still well ahead of the nation's average growth rate of about 3.3% in the past 20 years.</br></br>The Commerce Department also noted that while corporate profits of U.S. businesses continued to rise, they did so at a slower pace in the first quarter. Profits increased 1.2% from the previous three months, a figure that was substantially slower than the 7.2% growth in fourth- quarter profits and 9.9% growth in third-quarter profits. First- quarter profits were still up 31.6% from the year-earlier period. These figures are before taxes. Trends in after-tax profits of U.S. business were similar. During the first quarter, they increased 1.4% from the previous three months, down from fourth-quarter profit growth of 7.6% though still up briskly from a year earlier.</br></br>The profit figure is the government's broadest measure of profits for the whole U.S. economy and includes listed and nonlisted companies. The government makes adjustments for changes in the value of inventories and for depreciation and changes in the value of capital equipment.