GNP Revised Downward to 1.3% in 4th Quarter;Trade Deficit Gains Offset by Weak Spending
U.S. economic growth slumped to an annual rate of 1.3 percent in the final three months of 1986 as a long-awaited improvement in the trade deficit was offset by weakness in consumer spending, the government reported yesterday.</br></br>The Commerce Department said the gross national product, the broadest measure of economic health, slowed significantly from October through December as the United States finished its poorest year economically since the last recession.</br></br>For all of 1986, the GNP grew just 2.5 percent, showing even more sluggishness than in 1985, when the economy expanded at a 2.7 percent rate.</br></br>The new GNP report represented a downward revision in fourth-quarter growth, which originally had been put at a slightly faster 1.7 percent rate.</br></br>The weaker growth was accompanied by a slowdown in inflation as a price index tied to the GNP rose at an annual rate of just 0.7 percent from October through December, the best performance in almost two decades.