Business Notes THE ECONOMY

On the surface, the news from the Commerce Department looked bad. Showing the effects of a still high trade deficit and this summer's drought, the U.S. gross national product expanded at an annual rate of only 2.2% in the third quarter, down from 3.0% in the previous three months and the weakest performance in nearly two years.

But economists were more pleased than alarmed by the figures. Many had been afraid that the economy was overheating and that mounting inflation and higher interest rates were on the way. Now analysts are more confident that the economy stands a chance of avoiding those perils without going into a sharp downturn. "There is no reason for worry in this GNP result," said Allen Sinai, chief economist of the Boston Co. investment firm. "Growth of just under 3% is pretty good. This is more like a soft landing than a recession."