4th-Quarter Growth Rate Is Revised Upward

The U.S. economy grew a bit more quickly than first thought at the end of last year as business investment jumped, official figures showed Friday, -- an encouraging sign for further solid growth.

The growth of gross domestic product, the broadest measure of the nation’s economic health, was revised upward to a 4.1% annual rate for the fourth quarter, just above the initial reading last month of 4%, the Commerce Department said.

That confounded forecasts of a downward revision to 3.6% and showed the strongest back-to-back quarters since 1984, beating even the dramatic gains of the late 1990s boom.

“Overall, the signals on growth are pretty positive. It’s very clear that business investment has rebounded, but there are still questions about what’s happening in the labor market,” said Jim O’Sullivan, senior economist at UBS.

Consumer confidence has been hit by the weak job market. A reading on sentiment from the University of Michigan on Friday slipped to 94.4 in February from 103.8 last month.

The fourth-quarter GDP reading was nudged higher because business spending on equipment and software was more robust than first thought and businesses added to inventories at a faster pace.

The jump in business investment reinforced expectations that capital spending would lead the economy higher this year even as consumer spending eased from last year’s tax-cut- fueled surge. In the fourth quarter, consumers curbed their spending on expensive durable goods, which fell 0.1%.

A business spending collapse pulled the economy into recession in 2001, and the turnaround has fed expectations of a sustained economic expansion.

In the fourth quarter, imports jumped at a 16.4% annual pace, up from an initially reported 11.3% rate, another reflection of solid U.S. demand. Helped by a weaker dollar, exports also turned in a strong performance, rising at a revised 21% rate, the biggest jump in seven years.