Profits fall, GDP growth unrevised

WASHINGTON (Reuters) - U.S. corporate profits fell 3.3 percent in the fourth quarter of 2007, the Commerce Department said on Thursday in a report that also confirmed U.S. economic growth slowed to a meager annual pace of 0.6 percent in same period.

Wall Street analysts surveyed before the report had expected only a 0.1 percent drop in corporate profits, despite a crisis in the U.S. subprime mortgage market that has hobbled U.S. economic growth.

The drop in corporate profits was the first in a year, and the Commerce Department said profits of both financial and non-financial companies fell. The department said non-financial company labor costs rose, but were partially offset by price increases.

The department's third and final reading of fourth-quarter U.S. gross domestic product, which measures total goods and services output within U.S. borders, was unchanged at up 0.6 percent, matching expectations before the report.

The U.S. economy grew 2.2 percent for all of last year, the slowest since 2002, the Commerce Department said, as economists were forecasting a possible recession this year.

Spending on new homes plunged 25.2 percent in the fourth quarter, the biggest drop since 1981, the Commerce Department said.

(Reporting by Doug Palmer, Editing by Neil Stempleman)