Corporate America caused fresh fears of a US economic downturn yesterday as first-quarter profits fell at an annual rate of 6.2 per cent, their sixth consecutive quarter of year-on-year decline.

Profits in non-financial businesses for the first three months of this year fell by an annual 2.6 per cent while those in financial groups were down by 12.2 per cent, before writedowns.

Economists said that the figures raised questions over the Federal Reserve's expectation that its past series of steep cuts in US interest rates, alongside a fiscal boost from tax rebates to American consumers, will suffice to stave off a severe downturn lasting into next year.

Some analysts argued that the worst may be over because the profit figures for the first quarter of this year were higher than the final quarter of last.

The toll on financial firms abated, with their profits down only $3 billion (£1.5 billion) in the first quarter, against a $74.4 billion plunge in the previous three months, while non-financial businesses recorded a quarterly profit gain.

However, a number of economists said that the continuing slide in profitability, against a year earlier, remained ominous.

Rob Carnell, of ING Financial Markets, said: “A negative spin would be that, after so many quarters of declines, we seem no nearer a turn in the profit cycle.”

Persistent concern over the profitability of “America Inc” took some shine off an upward revision to the US economy's growth in the first quarter.

That lifted Wall Street hopes that the economy will avoid a technical recession, despite the slowdown's depth.

Overhauled data upgraded first-quarter growth to a still anaemic 0.9 per cent annual rate, from an initial estimate that GDP had risen only 0.6 per cent on an annual equivalent basis.

The upward revision came as cuts in America's estimated appetite for imports in the first quarter (Q1) flattered its trading performance compared with the initial data.

Imports of goods and services in Q1 are now estimated to have fallen by 2.6 per cent, against the 2.5 per cent rise previously reported.

Exports were also weaker than first thought, rising only 2.8 per cent, rather than 5.5 per cent as initially reported.

However, America's net trade showing in Q1 is now shown to have added 0.8 percentage points to growth - four times its previously calculated contribution.

Growth was also boosted in the revised data by an emerging revival in commercial construction activity. Investment in non-residential buildings is reported to have risen by 1.1 per cent, rather than falling by 6.2 per cent as shown in the early GDP estimates.

The boost to growth from this upgraded performance was partly offset, though as the rejigged figures also showed a sharp drop in companies' stocks, by $14.4 billion, compared with the previously estimated $1.8 billion rise.

Yesterday's figures confirmed the weakness of American consumer spending, which rose at an unrevised annual pace of 1percent in the first quarter - less than half the 2.3 per cent gain in the previous three months.

Although the upward revision of first-quarter growth will offer some comfort to the Federal Reserve over the fallout for US economic activity from the credit crunch and the housing slump, yesterday's data also offered the central bank some reassurance over stubbornly high inflationary pressures.

A key inflation gauge closely tracked by the Fed showed that the annual rate of price increases across the US economy, after excluding food and energy costs, eased to 2.1 per cent in the revised data, down from an initial estimate of 2.2 per cent and closer to the Fed's preferred 2 per cent ceiling.

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