· U.S. real GDP growth during the third quarter was revised upward to 4.9% (AR) from 3.9% in the advance report. The latest figures from the Commerce Department were about as expected. The revision came from two components only: net exports and inventories.

· Improvement in the net export deficit added 1.4 percentage points to GDP growth during 3Q versus an initial indication of a 0.9 point add. During 2Q, improved net exports made a 1.3 percentage point growth contribution. A modest upward revision to export growth to 18.9% (AR, 10.2% y/y) added 2.1 points to GDP growth and a modest downward revision to import growth to 4.2% (1.7% y/y) left imports subtracting 0.7 points from growth.

· Inventories added a revised 1.0 percentage points to 3Q growth in GDP versus an initial indication of just a 0.4 add. Inventories contributed 0.2 points to 2Q growth and that contribution has been negative this year.

· Overall corporate profits fell at a 4.6% annual rate (+1.9% y/y) last quarter. The housing market's travails  weighed down the financial sector' earnings by 20.5% (AR, +3.4% y/y). Domestic nonfinancial sector profitability also fell 5.9% (AR, -8.3% y/y) as costs rose but the lower dollar boosted rest of world earnings by 30.9% (AR, 34.7% y/y). 

· Growth in final sales to domestic purchasers actually was taken down a notch to 2.4% but still remained slightly improved from the 2.1% growth during the second quarter.

· The drop in residential investment last quarter was left roughly unchanged and it fell 19.7% (AR, -6.3% y/y). It subtracted 1.0 percentage points from growth during 3Q after subtractions of between 0.6 and 1.3 percentage points in each of the prior five quarters.

· Firm growth in business fixed investment continued as the underpinning of US demand. The 9.4% (5.2% y/y) rate of growth was upwardly revised and it added 1.0 percentage points to 3Q growth, about the same as during 2Q. Spending on structures was upwardly revised with a 14.3% rate of growth (13.3% y/y) and spending on equipment & software also was revised up to 7.2% (AR, 1.7% y/y) after weak growth or q/q declines from 2Q '06 to 1Q '07.

· Growth in real personal consumption expenditures was taken down a notch to 2.7% (2.9% y/y) but it still was double growth during 2Q. Growth in spending on durable goods rose 4.0% (4.6% y/y) despite a 4.9% drop in spending on motor vehicles. Nondurable goods spending rose 1.9% (2.2% y/y), which was lower than originally indicated, and services spending growth held steady at 2.8% (3.0% y/y).

· The GDP chain price index was left little changed at a 0.9% growth rate. Nonresidential (+0.8% y/y) and residential (+0.7 y/y) investment price indexes both fell during 3Q while consumer prices rose 1.7% (2.% y/y), held back by the decline in gasoline prices. Less food & energy consumer prices rose 2.2% (2.2% y/y), a number that was revised up slightly.

· The latest Beige Book from the Federal Reserve Board is available here.