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

DATE: THURSDAY, March 29, 1990                   TAG: 9003290158
SECTION: BUSINESS                    PAGE: A13   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

GROWTH BETTER THAN EXPECTED

The U.S. economy grew a modest 1.1 percent in the final quarter of 1989, better than previously believed, the government said Wednesday. Analysts predicted the rebound will continue this year but at its slowest pace since the last recession.

"We're not in recession and probably won't go into recession, but economic growth will be very, very slow," said Lawrence Chimerine, senior economic adviser for the WEFA Group in Bala Cynwyd, Pa.

The Commerce Department first reported in January that fourth-quarter growth had edged up a barely perceptible 0.5 percent, then revised the rate upward in February to 0.9 percent before issuing its final 1.1 percent estimate Wednesday.

"The revision showed an economy on sounder footing than earlier reported," said Allen Sinai, chief economist with the Boston Co.

But other reports demonstrated softness in some sectors, particularly construction and manufacturing.

New home sales in February bounced back 3.1 percent from steep declines in December and January, but the 607,000 units sold at a seasonally adjusted annual rate were well below the 647,000 units sold in 1989, the department said.

But a third report showed fourth-quarter after-tax corporate profits up 2.8 percent. It was the first advance of the year after declines of 1.1 percent in the first quarter, 7.2 percent in the second and 5.4 percent in the third.

Economic growth in the final three months of 1989 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 1986.

The latest survey of top economists by Blue Chip Economic Indicators projects growth of 1.7 percent this year. That would be the poorest performance since economic activity declined 2.5 percent in 1982 during the last recession.

The Commerce Department attributed its final GNP revision to an increase in final sales and a decrease in inventories. Another plus was a 9.6 percent increase in exports compared to a 2.2 percent gain in imports. Services were up 5.9 percent.

by CNB