Third-quarter gross domestic product rose at a 2.2% annual rate, revised down from the preliminary estimate of 2.8% growth on an annual basis reported last month, as private investment was revised lower and corporate profits were revised higher, the Commerce Department reported yesterday.

Consumer spending, which accounts for about 70% of GDP, was revised to a 2.8% rise from a 2.9% gain in the preliminary estimate.

Despite the downward revision, third-quarter GDP grew at the largest annual rate in two years. Today's report was the third and final of three quarterly GDP estimates. The third-quarter GDP growth was initially reported as 3.5% and was revised to 2.8% last month. The GDP contracted 0.7% in the second quarter.

Gross private domestic investment increased at a 5.0% annual rate, revised down from 8.4% growth in the second estimate. Nonresidential fixed investment was revised down, reflecting downward revisions to nonresidential structures and software purchases. Residential investment was revised lower to 1.5% growth from a 2.3% rise, still the first quarter of positive residential investment since the fourth quarter of 2007.

Core personal consumption expenditures for the third quarter were revised to 1.2% annual growth from 1.3%. Core PCE grew 2.0% on an annual basis in the second quarter.

Economists expected GDP to be up 2.8% and the core PCE price index to rise 1.3% in this revision, according to the median estimate from Thomson Reuters.

Corporate profits were revised higher to $132.4 billion, a 10.8% increase from the second quarter, the largest quarter of corporate profits since the first quarter of 2004. Decreases in labor costs more than offset a decrease in prices.

Government spending was revised lower to a 2.6% rise from a 3.1% increase. State and local spending was revised lower to a 0.6% decline from a 0.1% decline.

Exports and imports were revised higher. The trade gap between exports and imports was revised to $357.4 billion from $358.0 billion.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.