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

DATE: SATURDAY, April 1, 1995                   TAG: 9504030047
SECTION: BUSINESS                    PAGE: A6   EDITION: METRO 
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON                                 LENGTH: Medium

THAT YEAR-END WHOOSH WAS BIGGER THAN WE THOUGHT

\ The economy grew more rapidly at the close of 1994 than it had in a year, reigniting inflation fears.

The Commerce Department said the gross domestic product surged at a 5.1 percent annual rate in the 1994 fourth quarter, the fastest growth since it advanced at a 6.3 percent clip in the final three months of 1993.

The economy grew 4.1 percent for all of 1994. That's the strongest performance since 1984, when it expanded 6.2 percent during the final year of President Reagan's first term.

Private analysts said there is little reason to fear inflation or that the Federal Reserve will resume raising interest rates, because there are more recent signs that point to slower consumer spending this year.

``I think the market is mistaken,'' said Roger Brinner, chief economist for DRI-McGraw Hill, a Lexington, Mass., forecasting firm. ``This is not news. This is a revised record of the economy three to six months ago. This economy already has shifted to a lower gear.''

In a possible sign of slowing, the Commerce Department also reported Friday that orders to U.S. factories fell 0.2 percent in February, the first decline in four months. Demand for big-ticket durable goods was off 0.8 percent, also the first decrease since October.

The GDP figures were revised upward from the government's month-old estimate that showed a 4.6 percent annual rate gain for the fourth quarter of 1994. Increased business spending on aircraft and heavy duty trucks and higher net exports because of smaller imports were big contributors to the change.

Analysts said the latest revisions do not mean consumer spending, the main engine of economic growth, will rise.

``The basic message is that the economy went out of 1994 with a whoosh,'' said economist Robert Dederick of the Northern Trust Co. in Chicago. ``That, of course, is behind us. The economy seems to have slid out of the fast lane as soon as the page was turned, with a rather dramatic downshifting.''

Despite the potent fourth-quarter expansion, inflation remained well under control. One measure of inflation tied to GDP was revised upward slightly to show a gain of 2.6 percent, instead of a previous 2.5 percent estimate for the October-December quarter. That index rose 3.5 percent in the third quarter.

The Commerce Department also reported that after-tax corporate profits of U.S. corporations rose 2.5 percent in the fourth quarter, the same as in the third quarter. Profits jumped 7.3 percent in the second quarter.