U.S. economy at 10-year peak in fourth quarter

U.S. economy at 10-year peak in fourth quarter

WASHINGTON (Reuter): The U.S. economy grew slightly less briskly in the final three months last year than originally thought, though it was still at a 10-year peak, the Commerce Department reported Thursday.

In a final revision of fourth-quarter gross domestic product, the department said national output expanded at a 7 percent annual rate instead of 7.5 percent estimated a month ago.

That remained the strongest quarterly growth since the first quarter of 1984 when GDP climbed at a 7.9 percent rate. Company profits were strong and inflation was muted.

There were two major reasons for trimming back the fourth- quarter growth estimate: companies produced and put fewer goods on their shelves for future sales than first thought and consumers spent slightly less vigorously than the government estimated a month ago.

Growth slowed further in the opening months of 1994, partly because of severe winter weather that kept consumers from shopping, and is widely forecast to moderate to about a 3 percent rate in the current quarter.

In addition, federal policymakers have pushed interest rates higher to head off potential inflation -- a factor that has sent financial markets reeling downward and that will also affect consumer lending rates on cars and other goods.

Some analysts say the report a month ago of a burst of fourth- quarter growth triggered the current acute nervousness that still afflicts markets. They worry that not even the prospect of slower expansion is enough to settle markets because of a belief the Federal Reserve Board intends to increase interest rates further.

The Fed, which is the nation's central bank, has raised interest rates twice in the past two months, citing its intention to prevent inflationary pressures building and its wish to prolong the economy's expansion since a 1990-91 recession.