The Commerce Department said yesterday that the economy grew at a 3.4 percent annual rate during the third quarter, just about the pace the administration hopes to achieve to keep inflation from getting worse.
The 3.4 percent rate reported yesterday was a revised estimate of third-quarter growth in so-called real gross national product, the value of all goods and services produced by Americans.
It is exactly the same as the prelimnary estimate the Commerce Department made for the third quarter early last month. The economy grew at an 8.7 percent annual rate in the second quarter, a strong rebound from a 9.1 percent decline in the first three months of 1978.
The administration expects the economy to grow about 3 percent next year, roughly fast enough to keep the unemployment rate rate from rising but slow enough to keep excess demand pressures from building up in the economy.
Officials say they must take steps to reduce demand pressures in the economy to give the president's wage and price guideline program a chance to work.
The Commerce Department also reported tha inflation slowed in the third quarter to 7.1 percent from an annual rate of 11 percent in the second quarter.
Administration officials, from the president on down, have said that the steps the government has taken to fight inflation - including boosting interest rates and restraining federal spending to reduce the budget deficit - will not result in a recession next year.
But Arthur Okun, chairman of President Johnson's Council of Economic Advisers, said yesterday that the administration has about "one chance in three" of slowing growth without falling into a recession.
Okun told reporters that the administration will have to get "all the breaks" to keep the economy growing at the 3 percent rate it wants.
Many analysts - some of them within the administration itself - think the sharp increases that have occurred in interest rates in recent months as the Federal Reserve Board tries to fight inflation and prop up the dollar, will cause a recession.
But these economists have been criticized by both Carter and Federal Reserve Board chairman G. William Miller, who say there is almost no chance of a serious economic setback next year.
The Commerce Department also reported yesterday that corporate profits rose $5 billion in the third quarter to a seasonally adjusted annual rate of $168.4 billion.
In another development, Robert H. Mckinney, chairman of the Federal Home Loan Bank Board, said he believes there will be a slowdown in the housing industry next year as a necessary result of the drive to fight inflation.
But McKinney said the housing sector should not "bear the brunt (of inflation fighting) as it has in the past." He noted that special money market certificates offered by savings and loan associations have kept depositors' funds in savings institutions this year, while in earlier years investors would have withdrawn those funds to buy high-interest Treasury bills.
Rates for the special certificates are tied to the yield on Treasury bills.
McKinney said the special certificates have kept $27 billion in savings and loan associations since they were instituted last June by the FHLBB and the two other bank regulatory agencies.