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.

Gross domestic product expanded at a 2.2 per cent 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 five per cent rate in the third quarter.

After-tax corporate profits declined at a 1.6 per cent rate last quarter after increasing at a 4.7 per cent pace in the third quarter.

Corporate profits from outside the United States fell at an 8.8 per cent 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 per cent against the currencies of the main US trading partners between June and December.

For all of 2014, after-tax corporate profits fell 8.3 per cent, the largest annual drop since 2008.

Economists had expected fourth-quarter GDP growth would be revised up to a 2.4 per cent rate and after-tax corporate profits would rise at a one per cent pace.

US stocks were trading marginally higher, as investors bet that the weak growth data would delay a Federal Reserve interest rate increase until later in 2015. The dollar dipped against a basket of currencies, while prices for US Treasuries rose.

A separate report showed consumer sentiment slipped in March, adding to signs that the moderate pace of economic expansion persisted through the first quarter.

The University of Michigan said its consumer sentiment index fell to 93 this month from a reading of 95.4 in February.

The sturdy dollar, lingering weakness in Europe and Asia, harsh winter weather in the United States and a now-settled labour dispute at busy US West Coast ports dampened activity in the first two months of the year.

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