
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 28, 1990                   TAG: 9003280543
SECTION: BUSINESS                    PAGE: C-5   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

'89 GNP CHUGS IN WITH 3 INCREASE

The U.S. economy posted a 1.1 percent gain from October through December, the slimmest quarterly advance in three years, helping slow the increase of goods and services to just 3 percent in 1989, the government said today.

The Commerce Department's final revision of its fourth-quarter gross national product was up slightly from the 0.9 percent gain in its estimate last month. The department's initial estimate in January was 0.5 percent.

It followed increases of 3.7 percent in the first quarter, 2.5 percent in the second and 3 percent in the third.

The 3 percent gain for all of 1989 was the smallest since a 2.7 percent advance in 1986 and followed increases of 4.4 percent in 1988 and 3.7 percent in 1987.

A consensus of economists had indicated in advance of the latest report that fourth-quarter growth would remain at 0.9 percent.

Many analysts, however, believe that while the pace of economic growth rose further during the current quarter, partly because of weather-related factors, it will not bounce back in 1990 to the levels experienced during much of the 1980s.

In fact, the latest consensus of top economists projects a 1.7 percent growth forecast for this year. That would be the poorest performance since economic activity declined 2.5 percent in 1982 during the last recession.

The fourth quarter's 1.1 percent gain was the lowest since a 0.8 percent advance in the third quarter of 1986.

An inflation index tied to the GNP rose at an annual rate of 4.5 percent last year, the Commerce Department said, the same as its estimate last month.

The various changes left the GNP expanding in the fourth quarter at a seasonally adjusted annual rate of $4.17 trillion.

The department attributed the final revision to an increase in final sales, which offset a decrease in the amount of inventories.

The biggest drag on the economy in the fourth quarter was durable goods, which declined 14 percent.

Other areas of weakness included capital spending and housing construction.

Exports, on the other hand, jumped 9.4 percent in the fourth quarter, while imports rose just 2.2 percent.

In a companion report, the department said after-tax profits of U.S. corporations rose 2.8 percent in the fourth quarter. Profits rose 1.4 percent in the final quarter of 1988.

by CNB