US economic growth revised marginally upward to 2.1% in third quarter

• Revised GDP growth slowed down from 6.7% to 2.1%

• Pretax corporate profit increased to nearly 21% from a year earlier

U.S. economic growth for the October–December quarter was revised marginally higher, indicating slightly stronger personal spending than previously estimated.

Inflation-adjusted gross domestic product (GDP) rose at a 2.1% annualized rate during the third quarter, Commerce Department data showed Wednesday.

The increase was revised up 0.1 percentage points from the “advance” estimate, which was initially reported as an increase of 2% in October, the government said in its second estimate of GDP growth for the period.

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Economists had expected the pace of GDP growth to be revised to 2.2%.

GDP growth slowdown

Even with the slightly stronger growth than the previously estimated increase, the third quarter data still suggests a substantial slowdown from the 6.7% spike in the second quarter.

The commerce department said the slowdown in consumer spending led to the deceleration in real GDP in the third quarter.

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Moreover, a combination of a surge in COVID-19 cases and new restrictions, supply shortages and labor constraints prompted a sharp slowdown in personal consumption last quarter.

In the third quarter, the U.S. govt’s financial assistance program in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households also decreased.

Revised marginal growth

However, the slight upward revision indicates a more modest pace of inventory drawdown than what was initially estimated, which offset a big step-down in consumer spending.

The report also included business earnings for the period. Despite rising labour and materials costs, pretax corporate profits increased an annualized 4.3% from the July-September quarter.

The pretax corporate profit shot up nearly 21% from a year earlier.

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