Economic growth in the third quarter of 1998 was a healthy 3.9% per year, compared with the previous estimate of 3.3%.

That was more than twice the 1.8% growth rate of the second quarter.

And consumer spending grew at an even stronger rate of 4.1%, up 0.2% on the previous estimate.

Consumer spending has been strong all year, running at a 6% rate in earlier quarters.

But exports picked up in the second half of the year, while car dealers rebuilt stocks that had been run down as a result of the GM strike.

Inflation subdued

Despite the strong growth, there were few signs of inflationary pressures as the low cost of imports prevented domestic suppliers from raising their prices.

Inflation, as measured by prices affecting GDP, was only 0.8% - the lowest rate in 35 years, just below the 0.9% rate in the second quarter.

The lack of company pricing power means that profits have been squeezed.

Corporate earnings were down 1.8% to a seasonally adjusted rate of $473bn.

These falls may explain the worries on Wall Street which led the Federal Reserve to cut interest rates three times this autumn.