GDP revised down to 2.2% in 4th quarter

WASHINGTON --The US economy grew at an annual rate of 2.2 percent in the fourth quarter, slower than the government first estimated, as companies stepped up efforts to curb inventories.

The rise in gross domestic product, the sum of all goods and services produced in the United States, compares with a 3.5 percent rate reported on Jan. 31, and a 2 percent pace in the third quarter, the Commerce Department said yesterday. The Federal Reserve's preferred measure of inflation rose less than previously estimated.

The figures now show a more consistent pattern of slower growth over the last nine months of 2006 as housing, then manufacturing, slumped. Cuts in production and fewer orders last month suggest companies are still grappling with excess inventory, confirming the Fed's forecast that the expansion will proceed at a moderate pace.

For all of last year, the economy grew 3.3 percent, compared with 3.2 percent in 2005.

Economists forecast fourth-quarter growth of 2.3 percent. The report is the second for the quarter and will be revised again next month.

Also yesterday, the government said that new-home sales plummeted by 16.6 percent in January from the previous month. That was the largest decline since January 1994, when sales slid by 23.8 percent.

The decline in January -- much steeper than analysts anticipated -- left sales at a seasonally adjusted annual rate of 937,000, the lowest level since February 2003.

The median sales price of a new home -- where half sell for more and half for less -- dropped to $239,800 in January, down 2.1 percent from the same month last year.