The US economy grew at a solid 3.8 percent annual rate in the final quarter of last year -- stronger than previously estimated -- an encouraging sign that the business expansion was firmly entrenched at the start of the new year.
The new reading on GDP, released by the US Commerce Department on Friday, was better than the government's initial calculation made a month ago. That estimate showed the economy growing at a 3.1 percent pace.
The marked improvement reflected more robust spending by businesses on capital equipment and to build up inventories of goods.
The trade deficit also was less of a drag on fourth-quarter growth than initially thought.
GDP, the broadest barometer of the country's economic health, measures the value of all goods and services produced within the US.
"This is a really healthy performance for the economy," said Ken Mayland, president of ClearView Economics. "It really shows a better mix of growth."
The new fourth-quarter GDP figure also was better than the 3.5 percent growth rate that economists had forecast in advance of Friday's release.
Although economic growth in the final quarter of last year was a bit slower than the 4 percent pace measured in the third quarter, the performance was still solid.
For all of last year, the economy expanded by 4.4 percent, the best showing in five years. This annual estimate was the same as first reported last month.
Federal Reserve Chairman Alan Greenspan, delivering the Fed's economic outlook to Congress last week, struck a fairly positive note about the economy's performance.
"All told, the economy seems to have entered 2005 expanding at a reasonably good pace, with inflation and inflation expectations well anchored," he said.
Against that backdrop, Fed policymakers who have boosted short-term interest rates six times since June are expected to raise them again on March 22.
For the current January-to-March quarter, the economy is expected to grow at a rate of around 4 percent, according to some economists' projections.
Analysts are hoping that with the economy moving ahead solidly, companies will feel more inclined to step up hiring in the months ahead.
The jobs market was slower to recover from the 2001 recession than other parts of the economy. The nation's payrolls expanded by a respectable 2.2 million last year.
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