Economy Scores Biggest Gains Since Truman Era : GNP Spurt Puts Growth at 6.8%

The nation’s economy got “a real kick” from consumer spending in the last quarter of 1984 to notch the sharpest annual growth rate in more than three decades and prompt Commerce Secretary Malcolm Baldrige to proclaim “everything is on course.”

The Commerce Department said the gross national product grew at a surprisingly strong 3.9% annual rate in the fourth quarter to boost the 1984 growth rate to 6.8%--the nation’s strongest surge since 1951, when the Truman Administration chalked up an 8.3% advance.

Despite the rapid growth last year, inflation remained low. A price index tied to the GNP showed an inflation rate of 3.7% for all of 1984, the best performance since a 3% rise in 1967.

Reagan Delighted A “delighted” President Reagan, who gave a rare preview of the figures to inaugural ball crowds Monday night, issued a written statement today saying the results demonstrate “once again, that our economic program, given a chance to work, has worked beautifully in spite of the naysayers.”

Most economists were surprised at the intensity of the GNP’s fourth quarter spurt, coming on the heels of the third quarter’s 1.6% growth that had hinted at an economic slowdown.

Some agreed with Baldrige’s assertion that it bodes well for Administration projections of a 4% growth rate in 1985.

“I’m very happy with the figures because they show we’re keeping inside our target areas,” Baldrige said. “It shows that everything is on course. We have to worry about the budget deficit, but everything else is falling into place.”

Lower Interest Seen With growth on a steady but not breathtaking pace, and inflation remaining low, Baldrige said interest rates should ease further during the first half of 1985 and keep the recovery moving.

Personal consumer spending was up at an annual rate of 3.9% in the final three months of last year, compared with a small 0.7% increase turned in during the third quarter. A slump in consumer spending has been blamed in large part for the slowdown last year.

Baldrige characterized the increase as “a real kick” for the overall figure, and Jerry Jasinowski, chief economist of the National Assn. of Manufacturers, called it “the most surprising feature of the speedup in the fourth quarter.”

“It looks like consumers are spending more than expected and this is likely to lead to stronger economic activity in the first quarter,” Jasinowski said.

The 6.8% growth in last year’s GNP compared to a 3.7% advance for 1983, the first full year of recovery from the 1981-82 recession.

The only drag on the figures for the year was the dismal performance in trade. Personal consumption, business fixed investment, residential housing investment, federal government purchases and state and local government purchases were all up at a strong rate.