US third-quarter economic growth revised slightly higher

WASHINGTON, Jan 22 (Reuters) - The U.S. ⁠economy grew ⁠a bit ‍faster than initially thought in the third quarter, the government said on Thursday, while corporate profits were also revised higher.

Gross domestic ‍product increased at an upwardly revised 4.4% annualized rate, the fastest ​pace since the third quarter of 2023, the Commerce Department's Bureau of Economic Analysis said ​in its updated estimate of third-quarter GDP on Thursday.

Economists polled by Reuters had forecast GDP would be unrevised at a 4.3% pace. The economy grew at a 3.8% pace ​in the second quarter.

The slight upward revision to growth in the July-September period reflected upgrades to exports and business investment. Imports, which are a ​subtraction in the calculation of GDP, were revised up. Consumer spending and a smaller trade deficit were ‌the key drivers of GDP growth in the third quarter.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, ​grew at a 3.5% rate in the ⁠third quarter. But a measure of underlying domestic demand, final sales to private domestic purchasers, increased at a 2.9% rate, ‌revised down from the previously estimated 3.0% growth pace.

Economists said activity has assumed what they termed a K-shape pattern, with higher-income households and big corporations doing the heavy ‌lifting. They blamed this phenomenon on President Donald Trump's policies, including aggressive import tariffs, which ‌have raised prices.

A stock market boom and still-high home prices have cushioned upper-income households against inflation while lower- and middle-income households face a limited ability to substitute purchases, economists ‍said.

Similarly, large companies have sufficient resources to offset the rising costs from import duties, they added. In contrast, small businesses ⁠are barely staying above water, and are also struggling with a reduction in low-cost labor supply amid an immigration crackdown, economists said.

Profits from current production increased at a $175.6 billion rate in the third quarter, an upward revision of $9.5 billion.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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