It is hard to find anything bad to say about the nation's economy right now.

"The U.S. economy is the wonder of the world" said Merrill Lynch & Co. chief economist Bruce Steinberg, who raised his 1999 outlook for corporate earnings and his forecast for economic growth.

"About the only negative thing that could be said is that things are so good that they're too good to last," suggested Fleet Financial Group chief economist Nicholas S. Perna.

Mr. Steinberg and Mr. Perna both still expect a slowdown, but acknowledge there are no signs of one after a robust three-year run for the economy. Mr. Steinberg now anticipates gross domestic product growth of 3% to 3.5% this year, and earnings growth of 3.5%.

There was certainly no economic letup apparent Friday from the Labor Department's January employment report. Payrolls surged by a stunning 245,000, far more than economists anticipated. The jobless rate remained at a 28-year low of 4.3%.

The data implied that the Federal Reserve may raise interest rates if the trend continues. That in turn would mean a more challenging environment for banks and financial companies, and dampen prospects for their stocks.

"A couple of more reports like this and the Fed might adopt a bias toward tightening" credit conditions, said Henry G. Wilmore, U.S. economist at Barclays Capital Inc. in New York.

"If this trend goes another three months, we could be looking at a rate hike," said economist Sung Won Sohn of Wells Fargo & Co.

"My hunch is that we may be near another decline in the unemployment rate, and that would get the Fed's attention," Mr. Perna said. A further fall in the rate would set a new three-decade low.

The labor market is indeed tight. One clear sign is that the historically higher jobless rates for minority workers are falling.

"Employers are looking for warm bodies they can train," Mr. Sohn said. "And training more people is an important positive."

But there were also signs that the long-anticipated economic slowdown may still be out there.

"If you look at the last six months, the number of people working has been going up rapidly, but the number of hours worked has not," Mr. Sohn said. More than the number of jobs, aggregate hours worked is a key factor in calculating gross domestic product.

"The interesting question is, why are people working fewer hours?" Mr. Sohn said. "People could be sick and tired of working overtime-or this could be a harbinger of slower economic growth. Quite often, when economic growth slows, employers cut back hours ahead of layoffs."

At the same time, the strong employment picture in January was not inflationary. While average hourly earnings advanced 0.5% in January and rose 4% over the last year, the Bureau of Labor Statistics noted that earnings have "definitely moderated" since last May.

Mr. Steinberg pointed out that wages have moved within a noninflationary range for the past three years, and he forecasts they will moderate further. "Although the economy remains strong, profits will likely remain under pressure, keeping wage gains in check," he said.

That in turn may keep the Fed on hold this year regarding rates, as Mr. Steinberg and most economists still expect.

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