The US economy grew at its weakest rate in five years in the closing quarter last year, sapping corporate profits, the US Commerce Department reported today.
The report is likely to fan concern the US economy is slowing.Gross domestic product was revised down to 1 per cent annual rate of expansion from a previous 1.1 per cent.
The figures confirm US firms cut production and investment in the face of weaker growth consumer spending growth.
Wall Street economists had forecast fourth-quarter GDP growth would stay at 1.1 per cent rather than revised down.
The Federal Reserve has cut interest rates aggressively this year - dropping them three times by a half percentage point since the start of January - in a bid to pep up sluggish growth and hold off a recession.
Still, some analysts worry GDP may have stalled early in 2001, or barely edged ahead, as businesses struggle to work down overstocked inventories.
The US slowdown hit company balance sheets as after-tax profits shrank for the first time in two years.They were down 4.3 per cent to an annual rate of $626.4 billion after growing 0.6 per cent in the third quarter.
It was the first time since the fourth quarter of 1998, when profits fell 1.6 per cent, that businesses reported smaller earnings than in the prior quarter.