The US economy grew at a slightly stronger rate than thought in the third quarter because imports were not as hefty as first estimated, the Commerce Department said today, though corporate profits weakened.
Gross domestic product, the measure of total goods and services production within US borders, expanded at a 4 per cent annual rate in the July-September quarter instead of 3.9 per cent as previously reported, a relatively robust pace that implied steady and sustained growth.
It beat Wall Street economists' forecasts that third-quarter GDP growth would be unrevised at 3.9 per cent and was a step up from the second quarter's 3.3 percent rate of GDP growth.
Inflation remained muted despite signs that prices were starting to pick up. A favored gauge cited by Federal Reserve Chairman Alan Greenspan - personal consumption expenditures minus food and energy costs - gained at a 0.9 per cent annual rate instead of 0.7 per cent estimated a month ago.
That made it the smallest increase in prices since a matching 0.9 percent rise a year earlier rather than the smallest since the end of 1962 as had been the case.
The Fed has raised US interest rates five times this year, though its policy-setting Federal Open Market Committee played down inflation concerns when it last raised rates on December 14th.
Consumer spending, which fuels two-thirds of US economic activity, powered ahead at 5.1 per cent annual rate in the third quarter, the same as estimated a month ago and more than three times the 1.6 per cent increase in the second quarter.