WASHINGTON - The economy grew at a 7.3% annual rate in the fourth quarter - the fastest rate in almost 16 years, according to final government figures released Thursday.
This growth - besting the 6.9% previously reported by the Commerce Department - was paced by higher consumer spending and a smaller trade deficit. The blistering quarter capped the third straight year in which the economy grew more than 4%.
Corporate profits after taxes rose 2.7%, compared with 2.2% in the third quarter. For the year, profits rose 8.8%, after falling 2.9% in 1998.
Economists said the new data suggest the Federal Reserve will raise interest rates for a sixth time in less than a year when the Federal Open Market Committee meets May 16.
"The momentum from this sizzling pace carried into the first quarter," said Richard Yamarone, senior economist at Argus Research Corp. in New York. The economy has probably grown at a 4.8% pace in the quarter that ends today, according to a Bloomberg News survey of 34 analysts.
Company profits in the first quarter also will reflect the booming economy, a private survey of analysts indicated. Profits before taxes probably rose 18%, compared with 11% in the first quarter of 1999, according to First Call/Thomson Financial. The survey, which examines companies in the Standard & Poor's 500 index, is narrower than the government's.
Consumer spending, buoyed by rising confidence and unemployment near a three-decade low, fueled the fourth-quarter gain in gross domestic product as the economy extended a record expansion that begins its 10th year this week.
The fourth-quarter pace was the fastest since the economy grew at a 9% clip in the first quarter of 1984. It came after a 5.7% rate of growth in the third quarter.
For all of 1999, the economy expanded 4.2%. The last time it grew 4% or more for three consecutive years was 1976-1978.
Consumer spending, which accounts for two-thirds of economic activity, rose at a 5.9% annual pace in the fourth quarter - the same as previously reported - and 4.9% in the third quarter.