(Bloomberg) -- US corporate profits fell in the first quarter by the most in almost two years as some companies struggled to offset surging costs, while the overall economy shrank in the period.

Inflation-adjusted gross domestic product decreased at a 1.5% annualized rate in the January-March period, compared with an initially reported 1.4% decline, Commerce Department data showed Thursday. Consumer spending, which accounts for the majority of the economy, grew an upwardly revised 3.1%.

The report also included the first read on business earnings for the period. Pretax corporate profits decreased an annualized 2.3% from the prior quarter and were up 12.5% from a year earlier. Last year was the most profitable year for American corporations since 1950.

Faced with rising costs for materials, shipping and labor, many companies have sought to pass along those expenses to customers through higher selling prices. However, input costs keep rising, and consumers are grappling with decades-high inflation. 

In recent weeks, retailers like Target Corp. and Walmart Inc. cut their forecasts for profit this year amid bloated inventories and price increases that failed to keep up with rising costs.  

Despite the decline in GDP, the first quarter figures belie a solid pace of consumption. The contraction largely reflected an import surge -- tied to solid consumer demand.

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