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Last year's figures revised

The government, in annual revisions to key economic data, reported Friday that economic growth last year wasn't as sizzling as previously thought.

Those revisions showed a dramatic reduction in growth for last year from 5 percent, which had been the best showing since 1984, down to 4.1 percent, the same growth rate as in 1999.

One of the main reasons: business investment in computer software was overestimated. Spending on software and equipment actually grew at a 11.1 percent rate for all of 2000, rather than the 13.7 percent rate previously reported.

To make that estimate more accurate in the future, the government changed the way its tracks such investment.

Sung Won Sohn, chief economist at Wells Fargo, believed the red-hot 5 percent growth rate originally reported may have led to "over-exuberance on the part of investors and business executives," encouraging them to overestimate the potential for sales and build up inventories of goods more than they should have.

Even with the downward revision, Kathleen Cooper, the Commerce Department's under secretary for economic affairs, said the 4.1 percent economic growth in 2000 was still "a very strong performance, ... one any country would be proud of."

The annual revisions, which are based on more complete data, also showed that consumer spending last year was slightly less robust than previously thought, while Americans' incomes grew more than first estimated.

Those changes lifted the nation's personal savings rate -- savings as a percentage of after-tax income -- out of negative territory.

The government also slightly lowered its previous estimates of growth for the years 1998 and 1999.

The economy grew by 4.3 percent in 1998, instead of 4.4 percent. In 1999, the economy expanded by 4.1 percent, rather than 4.2 percent.
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