The U.S. economy braked abruptly in the fourth quarter, growing at a 0.6% annual rate, the slowest pace since late 2002, the Commerce Department reported today.

The 0.6% estimate for gross domestic product, unrevised from the previous two estimates, was exactly as forecast by economists. By contrast, GDP grew at a 4.9% annual rate in the third quarter.

The final estimate for fourth-quarter GDP contained little that was new, aside from fresh data on corporate profits.

After-tax profits from current production fell US$37.9 billion, or 3.3% quarterly, to an annualized US$1.11 trillion. Net cash flow fell US$55.7 billion, or 4.4%.

Financial industries’ profits fell US$104.6 billion on an annualized basis before taxes, even without any of the massive write-downs triggered by losses in subprime mortgages.

Nonfinancial industries’ profits fell US$30.7 billion annualized, including US$26.6 billion in energy companies and US$27.6 billion in wholesale trade. Corporate profits after taxes are up 3.3% compared with a year ago, according to the government’s data.


Meanwhile, initial claims for jobless benefits fell 9,000 to 366,000 after seasonal adjustments in the week ended March 22, the U.S. Labor Department said today.

Economists expected a decline of 8,000.

The four-week average of new jobless claims rose by 1,750 to 358,0000, the highest level since October 2005.