GNP Growth Figures Revised Downward : Economy: U.S. releases new report as many experts now argue when--not if--a recession began.

The U.S. economy grew at a 1.7% annual rate in the third quarter, a bit less than previously thought, the government reported today.

The Commerce Department said its downward revision in the gross national product showed the economy advanced even more slowly from July through September than the 1.8% first reported last month.

The GNP is the nation’s total output of goods and services and its broadest measure of economic activity.

Recent surveys of professional economic forecasters show that most believe that the economy has tumbled into a recession--informally defined as two consecutive declines in the GNP. For many, the question is when it began.

Some analysts contend that most of the third-quarter growth was concentrated in the first part of the period and was tapering off at the end until Iraq stormed Kuwait on Aug. 2 and the subsequent oil-price shock to the economy.

Even President Bush and his chief economic adviser, Michael Boskin, have said publicly the economy has weakened in recent months. Bush calls it a “slowdown”; Boskin says it is a “lull.”

The department also reported that a GNP measure of inflation rose even more than previously thought--at an annual rate of 4.2%. It first was reported to have risen 4.1% after a 3.9% gain in the second quarter. Inflation advanced at a 6.4% rate in the first quarter.

At the same time, it said after-tax profits earned by American corporations jumped 6.7% during the third quarter.

Corporate profits dropped 0.6% in the second quarter, erasing a 0.5% gain in the first.

Leading the downward revision in the GNP was a 3.2% gain in consumer spending, down from the 3.6% advance first reported.

At the same time, inventories declined $4.4 billion, rather than the $1.7 billion in the initial report.

Housing construction was off 19.2%, instead of 15.4%, while government spending rose just 0.6%, rather than the 1.3% gain first reported.

On the other hand, business investment was up 8.2% instead of 7.4% in the initial report, while the trade deficit narrowed to $500 million rather than the $7.9 billion reported last month.

Each quarter’s GNP is revised twice as more complete data become available. The final revision in the third-quarter report is due next month.

Despite the third-quarter growth, many economists believe that the recession began during the period--if not before.

Elliott Platt, an economist with Donaldson, Lufkin & Jenrette securities dealers in New York, notes that the U.S. economy has experienced growth during the first quarter of five of the eight recessions since World War II.