US third-quarter economic growth revised slightly higher

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)