Economy Ekes Out Tiny Gain : Commerce: The gross domestic product grew at an annual rate of just 0.3% in the fourth quarter. But Greenspan sees no need for action.

Government figures released Wednesday showed that the economy virtually stood still in the fourth quarter, leading public and private economists to predict that any meaningful recovery is months away.

At the same time, Federal Reserve Chairman Alan Greenspan said he expects the economy to pick up in the spring and sees no immediate need for further interest rate cuts or other actions to jump-start growth.

Greenspan told the Senate Banking Committee that even though the economy had flattened and lacked “bounce,” there were no signs it was falling back into recession.

Greenspan’s comments helped push interest rates higher in the bond market and contributed to a sharp drop in stock prices.

The Commerce Department said the gross domestic product’s minuscule fourth-quarter growth--at an annual rate of 0.3%--was due mainly to a spurt in exports and a modest revival in the housing sector. And some experts contend that those gains will prove short-lived.

Most other components of the GDP showed little or no strength, including consumer spending, which accounts for two-thirds of the nation’s economic activity and is essential for any sustained growth.

For the year, the GDP sank 0.7%, the first annual decline since a 2.2% drop in 1982, the final year of the previous recession. The GDP is the nation’s total domestic output of goods and services.

“Basically, it says the economy is stalled,” said Sung Won Sohn, an economist with Norwest Corp. in Minneapolis.

“The economy was treading water at the end of the year,” concurred Mark Zandi of Regional Financial Associates in West Chester, Pa.

Acting Commerce Secretary Rockwell Schnabel called the sluggishness “clear and convincing evidence” of the need for quick congressional enactment of the economic growth package President Bush outlined Tuesday night in his State of the Union message.

But Greenspan, appearing before the Senate committee that is considering his renomination to a second four-year term as Fed chairman, was less enthusiastic about some of the President’s proposals.

Greenspan told lawmakers that he had no strong concern about a “limited” budget package to help the economy, but he was worried that they would go too far and worsen the budget deficit. That could raise inflation fears and send long-term interest rates higher, he warned.

“It will not serve our purposes very much if we bring short-term rates down and the long-term rates don’t (come down),” Greenspan said. “Unless we are concerned about inflation, we are not concerned about long-term growth.”

He said rate cuts engineered by the Fed were working their way through the economy, and he expected to see a pickup in growth soon, although he said that was not yet certain.

“As far as I am concerned, I would expect the economy to quicken its pace, but I am spending a great deal of time watching rather than forecasting,” Greenspan told the panel.

But he assured the panel that if the recovery failed to take hold, the Fed would be ready to take further action. If central bank policy-makers believe more action is needed, “we will be there,” Greenspan said.

The Commerce Department’s chief economist, Antonio Villamil, said at a news conference that a sustained recovery will not begin before spring, even with the growth package and the impact of lower interest rates.

Zandi agreed, saying: “We should begin to see more signs of growth by summer and maybe as late as fall in response to the significant drop in interest rates and perhaps as a result of any fiscal stimulus.”

But any growth this year is likely to be anemic compared to other post-World War II recoveries, many economists agree.

Sohn, for instance, projects that the GDP will grow only about 2% this year.

Anemic Growth The GDP measures all the goods and services produced by workers and capital located in the Uniteed States, regardless of ownership. Percent change from previous quarter 1991: 4th quarter (prelim.): +0.3% quarterly at annual rate Source: Commerce Department

Gross Domestic Product The GDP measures all goods and services produced in the United States, regardless of ownership. Percent change from previous year Carter years 1978: +4.8% 1980: -0.5% Reagan years 1984: +6.2% 1982: -2.2% Bush years 1991: -0.7% 1989: +2.5% Source: Commerce Department