WASHINGTON, Nov 25 - Robust business and consumer spending powered the U.S. economy ahead at an even brisker clip in the third quarter than first thought, the government said on Tuesday in a report that showed corporate profits growing at the fastest rate in more than a decade. Gross domestic product, or GDP, shot up at an 8.2 percent annual rate, more than double the second quarter's 3.3 percent gain and the strongest quarterly advance in 19-1/2 years. A month ago, the Commerce Department said GDP advanced at a 7.2 percent rate. Its revision surpassed Wall Street economists' forecasts for a 7.8 percent gain. The report showed the long-awaited revival in corporate investment may have taken hold, with nonresidential business spending surging at a 14 percent annual rate, double the second quarter's 7.3 percent and ahead of the initially reported third-quarter rise of 11.1 percent. The department sharply revised its estimate of inventory reductions, saying stocks of unsold goods had fallen by $14.1 billion in the quarter instead of $35.8 billion it originally reported. Consumer spending, bolstered by tax cuts, grew at a revised 6.4 percent annual pace in the third quarter, lower than the 6.6 percent pace estimated a month ago but well ahead of the second quarter's 3.8 percent growth rate. Most forecasters say the third-quarter jump in GDP is unlikely to be matched in coming quarters as the impact of tax reductions wears off. Many forecasters see growth more likely in the 4 percent range.
Corporate profits after taxes climbed at a 10.6 percent annual rate during the quarter, a sharp change from the second quarter's 5 percent contraction. Commerce said it was the strongest pickup in profits since a 12.4 percent jump in the fourth quarter of 1992. Fed officials have said that firmer corporate profits are vital to a sustained expansion, not only because they bolster confidence but also because they provide the means and incentive for companies to hire new workers and add to production capacity. Commerce will issue a final estimate of the quarterly growth data next month.//