Home Breaking News Fourth-quarter GDP raised to 2.1%, corporate profits rise again

Fourth-quarter GDP raised to 2.1%, corporate profits rise again


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The U.S. economy grew 2.1% in the final three months of 2016.

WASHINGTON (MarketWatch) — The U.S. grew slightly faster at a 2.1% pace in the fourth quarter and corporate profits continued to rebound, according to a fresh look at how the economy performed at the end of 2016.

Gross domestic product, the official scorecard for the economy, was a bit stronger than the previously reported 1.9% annual rate owing to higher spending on gasoline and travel-related services, the government said Thursday.

Consumer spending was revise up to a 3.5% increase from 3%, largely accounting for the upward revision to fourth-quarter GDP. Most other figures in the report were little changed.

More good news came by way of another increase in corporate profits — the third in four quarters.

Adjusted pretax profits rose at a 0.5% annual pace in the fourth quarter after a nearly 6% gain in the third quarter, the Commerce Department said. Profit figures are adjusted for depreciation and the value of inventories.

For all of 2016 pretax earnings actually fell 0.1%, but they improved rapidly in the second half of the year.

In premarket trading Thursday, the Dow Jones Industrial Average

DJIA, -0.20%

was set to open lower.

In 2015, corporate profits tumbled 3.1% to mark the first decline since the Great Recession. Companies were beset by a weak global economy and a strong dollar that curbed imports. Key industries such as energy and agriculture also took a hit amid a broad decline in commodity prices.

Last year profits revived as the world economy improved, commodity prices stabilized and companies took extra step to reduce costs.

Higher profits are a good sign for the economy, suggesting that businesses can hire and spend more. Many companies are hopeful in early 2017 that a pro-business Trump White House will ease regulatory burdens and take other steps to provide relief, giving them further impetus to expand.

Early signs in 2017 point to an increase in business investment, a development that could put a bit more wind at the back of a U.S. economy constrained to 2% annual growth since it exited the Great Recession in the middle of 2009.

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