Corporate profits rose only $3.9 billion to an annual rate of $246.2 billion in the fourth quarter of 1979, while after-tax profits climbed a scant $500 million, the Commerce Department reported yesterday.
The department also revised downward its estimates for the gross national product and for inflation for the quarter. After adjustment for inflation, the output of goods and services grew at a 2 percent annual rate last quarter instead of the 2.1 percent rate estimated last month. The GNP deflator -- the broadest measure of inflation in the economy -- rose at an 8.4 percent annual rate instead of the 8.7 percent rate originally estimated, the department said.
Except for large increases in oil industry earnings, corporate profits would have fallen in the fourth quarter. Even after eliminating inventory profits generated by inflation, earnings by petroleum and coal products companies were running at a $28.1 billion rate in the quarter, nearly double the $14.8 billion rate of the comparable quarter in 1978.
Oil and coal profits also were up by almost one-third from the $21.8 billion rate of the third quarter.
Corporate profits from current operations -- which are measured after the adjustment for inventory profits and for the difference between historic cost depreciation and replacement cost depreciation -- increased in the fourth quarter by $1.2 billion to an annual rate of $166.1 billion.
In manufacturing, the big jump in oil profits offset widespread declines in other industries, particularly for automakers.
Manufacturing profits, with the inventory adjustment, were running at an annual rate of $86.9 billion for the quarter, up $500 million from the previous three months. But manufacturers' earnings were down from a $90.6 billion rate in the fourth quarter of 1978.
Profits in the motor vehicle and equipment industry were recorded at a $1.5 billion rate, up from a $500 million loss in the third quarter, but down sharply from a $9.3 billion rate in the last quarter of 1978.
The latest revisions left the estimate for GNP last year, adjusted for inflation, 2.3 percent above the 1978 level. The quarterly pattern for 1979 now shows these rates of change: a 1.1 percent increase in real output in the first quarter, a 2.3 percent drop in the second, a 3.1 percent increase in the third and a further 2 percent rise in the fourth. Most forecasters are predicting a smaller rise in output this quarter.
But the revised figures also show that consumers and governments were responsible for all of the fourth-quarter gains in spending. Every other major component of GNP -- business investment, residential construction, inventory accumulation and net exports -- either fell or was unchanged after adjustment for inflation.
Consumers were able to increase their spending substantially, even though disposable personal incomes rose very little in real terms, because of reduced savings. The personal savings rate dropped to 3.5 percent for the quarter from 4.3 percent in the third quarter and 5.4 percent in the second.
Commerce Department analyst Adren Cooper said that in the fourth quarter "it was a slower economy, and profits don't grow as fast, or actually declined, depending on which measure you use."
One drain on corporate profits, but an increase to other owners of capital, was a sharp rise in net interest paid by the corporate sector. In the fourth quarter, net interest was being paid at an annual rate of $139.2 billion, up $7.7 billion from the previous quarter and up $21.6 billion from the last quarter of 1978.