US economic growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy more or less maintained the moderate pace of expansion as the year ended, supported by a strong labor market. Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said on Friday in its third estimate of third-quarter GDP. That was unrevised from November’s estimate. The economy grew at a 2.0% pace in the April-June period.
Despite the unrevised reading, which was in line with economists’ expectations, consumer spending was stronger than previously reported. There were also upgrades to business spending on nonresidential structures such as power infrastructure, which limited the drop in overall business investment. That offset downward revisions to investment in homebuilding and inventory accumulation. Imports, which are a drag to GDP growth, were higher than previously estimated.
When measured from the income side, the economy grew at a 2.1% rate in the last quarter, rather than the 2.4% pace estimated in November. Gross domestic income (GDI) increased at a rate of 0.9% in the second quarter. The revision to the income side of the growth ledger reflected a downgrade to corporate profits. After-tax profits without inventory valuation and capital consumption adjustment, which corresponds to S&P 500 profits, were revised down to show them declining $23.1 billion, or at a rate of 1.2%. Profits were previously reported to have decreased $11.3 billion, or at a rate of 0.6% in the third quarter.
They were in part held down by legal settlements with Facebook and Google. Profits increased at a 3.3% rate in the second quarter. The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, increased at a 2.1% rate in the July-September period. That was down from the previously reported 2.3% pace and acceleration from a 1.4% growth rate in the second quarter. US financial markets were little moved by the data.