4th-Quarter Growth Is Revised Up

The economy clocked in at a 3.8% pace in the final quarter of 2004 -- faster than initially thought -- and some analysts said it was cruising at that speed or better in the current quarter.

In the newest reading on the economy’s fitness, the gross domestic product exceeded a previous estimate of a 3.1% annual growth rate for the October-to-December quarter, the Commerce Department reported Friday. GDP measures the value of all goods and services produced within the United States.

The improvement reflected more robust spending by businesses on capital equipment and on inventories of goods. The trade deficit also was less of a drag on fourth-quarter growth than initially thought.

Although economic growth in the final quarter of last year was slower than the third quarter’s 4%, the performance was solid.

“We are now at a comfortable cruising altitude,” said Lynn Reaser, chief economist at Banc of America Capital Management. “What is significant is that all parts of the economy were pulling their own weight.”

In other news, sales of previously owned homes slipped 0.1% in January from the previous month to a seasonally adjusted annual rate of 6.8 million units, the National Assn. of Realtors reported. Even with the drop, sales remained healthy, analysts said.

For the current January-to-March quarter, the economy is expected to grow at a rate of about 4%, some economists project.

Analysts are hoping that with the economy moving ahead at a good pace, companies will feel more inclined to step up hiring in coming months.

Economists predict that the nation’s payrolls will expand by a sizable 225,000 in February, which would be up from January’s 146,000 gain.