The government published fresh statistics yesterday showing the economy grew far more rapidly last quarter than estimated previously, but inflation accelerated to an 11 percent annual rate - is worst performance since 1974.
A second revision of te April-through-June growth in the gross national product showed the nation's total output rose at a boomy 8.7 percent pace during the period - well above the 7.4 percent and 8 percent in earlier reports.
At the same time, the department announced that revised figures showed corporate profits grew by a robust 18 percent in the quarter, rather than the 14.9 percent reported earlier. Profits fell 2.2 percent the previous quater.
The upward revision in "real" growth was welcomed by the administration. William A. Cox, the department's deputy chief economist, said the extra growth may have provided "more momentum" to the current quarter's pace.
However, the revision in the inflation figure was bad news by any standard. The GNP price index, considered the most comprehensive measure of inflation, has not risen that sharply since the final three months of 1974.
The figures came as, separately, the Federal Reserve Board tightened money and credit conditions further, pushing to 8.5 percent the interest rate on federal finds - a move expected to exert upward pressure on other short-term rates.
Yesterday's revisions were expected to heighten prospects that the Carter administration will meet its 1972 growth targets, which call for a 4 percent gain in output for the year as a whole.
The second quarter's performance was in part a rebound from the slump caused during the first three months of the year by the impact of the cold spell and the prolonged coal strike.
The statistics on corporate profits were expected to provide further fuel for organized labor, which has been presurling the administration to hit harder on business in any wage-price guidelines program it adopts.
George Meany, president of the AFL-CIO, has been pointing to recent gains in corporate profits as evidence that business has been able to keep ahead of inflation while workers have been left behind.
The additional upward televisions in "real" GNP stemmed primarily from increases in foreign investment in the United States, and from a larger-than-supposed accumulation of domestic business inventories.
At the same time, the department revised downward its estimates of personal consumption. Most other major sectors of the economy remained relatively unchanged from the revisions published a month ago.
The increased inflation was asstributed primarily to higher-than-estimated price rises for building materials, in the face of increasing shortages. Earlier reports had placed the inflation rate at 10.0 and 10.7 per cent.
By comparison, in the first three months of this year, the economy's output declined by an 0.1 per cent annual rate, while prices increased at a 7.2 per cent pace. Inflation has slowed again since the second quarter.
The revised figures on corporate profits showed profits before taxes rose by $33.4 billion last quarter to a new annual rate of $205.5 billion.
However, most of the increase stemmed from inventory profits. Profits from current production, regarded as a more accurate measure of business activity, rose $30.8 billion to a new annual rate of $163.4 billion.