US economic growth cooled in the fourth quarter as previously reported and after-tax corporate profits took a hit from a strong dollar, which could undermine future business spending. GDP expanded at a 2.2% annual rate, the Commerce Department said on Friday in its third estimate of GDP. That was unrevised from the forecast the government published last month.
Businesses throttled back on inventory and equipment investment, but robust consumer spending limited the slowdown in the pace of activity. The economy grew at a 5% rate in the third quarter.
After-tax corporate profits declined at a 1.6% rate last quarter after increasing at a 4.7% in the third quarter. Corporate profits from outside the United States fell at an 8.8% rate, the steepest decline since the 2007-2009 recession.
Slower profit growth could mean slower investment in the coming months, said Thomas Costerg, an economist at Standard Chartered in New York.
Multinationals such as technology giant IBM, semiconductor maker Intel Corp, industrial conglomerate Honeywell and Procter & Gamble, the world's largest household products maker, have warned that the dollar will hurt their profits this year.
The dollar gained 7.8% against the currencies of the main US trading partners between June and December. For all of 2014, after-tax corporate profits fell 8.3%, the largest annual drop since 2008.
Economists had expected fourth-quarter GDP growth would be revised up to a 2.4% rate and after-tax corporate profits would rise at a 1% pace.