GDP Grew Faster 1.4% In Q4, But War Jitters, Oil Now Hold Back Q1; Chicago Factories Slower; Late-'02 lull was ending as business, consumers, gov't all lifted spending.(A)

Byline: JED GRAHAM

The economy grew at a sluggish 1.4% rate in the fourth quarter, but twice as fast as the government's first estimate, the Commerce Department said Friday.

The additions to growth came from across-the-board pickups in business, government and consumer spending, and provided evidence that the economy was emerging from its autumn soft spot by the end of 2002.

Stronger growth in December gave a lift to the revised data, said David Littmann, chief economist at Comerica Bank.

"We entered the year with excellent dynamics and momentum," Littmann said. "But that momentum had definitely broken down as we reached mid-quarter."

The GDP data and another report out Friday on Chicago-area manufacturing in February both point to gradual recoveries in business investment and industrial production. But the surge in oil prices and drop in consumer confidence tied to an expected war with Iraq could derail those.

"I think we've seen a secondary soft spot develop here," Littmann said, noting evidence of weakness in housing, autos and travel. But should the war worries fade, he said, "My own forecast is that the economy is poised to surge."