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THURSDAY March 27, 2008 GROWTH SLOWS IN THE FOURTH QUARTER “Final” Estimate of GDP The economy grew at an annual rate of 0.6 percent in the fourth quarter, compared with a 4.9 percent increase in the third quarter, according to the “final” estimate released by the Bureau of Economic Analysis. The fourthquarter growth rate was unchanged from the “preliminary” estimate. Gross Domestic Product (GDP) The fourth-quarter slowdown in GDP growth reflected a downturn in inventory investment and slowdowns in exports, federal government spending, and consumer spending. In contrast, imports turned down. Quarter-to-Quarter Growth in Real GDP 6 Percent 4 2 0 I II III 2004 IV I II III 2005 IV I II III 2006 IV I II III 2007 IV Real GDP growth is measured at seasonally adjusted annual rates. Corporate Profits Fourth-quarter corporate profits increased 2.5 percent from the same quarter a year ago. Compared to the third quarter, profits fell 3.3 percent. Profits in the fourth quarter were adjusted to exclude unusually large asset write-downs and higher provisions for loan losses. Unlike profits reported in corporate financial statements, the BEA measure of profits does not treat these items as charges against earnings because they do not reflect losses from current production. As a result, aggregate profits based on financial statements declined more than the GDP measure of profits. Year-over-Year Growth in Corporate Profits 30 25 Percent 20 15 10 5 0 I II III 2004 IV I II III 2005 IV I II III 2006 IV I II III IV 2007 Corporate profits growth is measured as the percent change from the same quarter one year ago. BEA data—including GDP, personal income, the balance of payments, foreign direct investment, the input-output accounts, and economic data for states, local areas, and industries—are available on the BEA Web site: www.bea.gov. E-mail alerts are also available. NOTE: The “advance” estimate of GDP for the first quarter of 2008 will be released on April 30, 2008. Contact: Ralph Stewart 202–606–2649 Bureau of Economic Analysis, U.S. Department of Commerce