Adjusted for inflation, the total output of U.S.-produced goods and services increased at an annual rate of 3.5% from January through March this year, the U.S. Commerce Department reported May 26. That rate was four-tenths of a percentage point higher than the 3.1% the department initially reported for first-quarter real GDP on April 28. Commerce is slated to release its final figure for the first quarter on June 29.
The revised GDP figure is right in line with what many economists believe to be the long-term potential growth rate of the U.S. economy, although it was a tenth of a percent below the 3.6% growth rate economist generally were expecting.
Higher consumer spending and residential construction, along with a better net trade performance, accounted for much of the revision from the Commerce's Department's first read of the GDP numbers.
On May 26, the department also reported after-tax profits for U.S. corporations during the first quarter were at a seasonally adjusted annual rate of $983 billion, 1% higher than the $973 billion rate in the fourth quarter of 2004. "On a year-over-year basis, after-tax profit growth slowed to 8.1% [in the first quarter of 2005] from 11.0% in the fourth quarter [of 2004]," notes Merrill Lynch & Co., New York. "Still, the profits-to-national-income ratio was about unchanged at 9.1%, suggesting that profit margins remain very close to the highs seen last year."