Economy Posts Higher Growth Than Estimated --- Fourth-Quarter GNP Rose At 4.9% Rate; Revision In Trade Deficit Cited
WASHINGTON -- The economy grew at a strong 4.9% annual rate in the fourth quarter of last year, the Commerce Department said, rather than the 3.9% rate estimated by the agency last month.</br></br>The large revision in the inflation-adjusted gross national product, the nation's total output of goods and services, was due principally to an unexpected reduction in December's trade deficit from the earlier estimate. For its earlier GNP report, the department had estimated that the December trade deficit would approach $10 billion, but in fact the deficit, as reported three weeks ago, was $8.2 billion. The deficit is a negative factor in calculating the GNP.</br></br>Most analysts believe the easing in the trade deficit is temporary, resulting from the economy's slowdown in the third quarter. They expect the rapid growth of the economy in the fourth quarter, combined with the continued strength of the dollar, to cause the deficit to get even larger next year.</br></br>The economy grew at a sluggish 1.6% rate in the third quarter. GNP in the fourth quarter of 1984 was 5.9% over the fourth quarter of 1983, rather than 5.6% as reported last month. And the full-year's output was 6.9% higher than in 1983, rather than 6.8% as previously reported.</br></br>The strong growth in the fourth quarter makes it clear that the economy began 1985 with considerable momentum.