THE American economy expanded less briskly in the final quarter last year than previously thought, the Commerce Department has said, but it still entered 1997 on a buoyant note. In a second and final revision of gross domestic product for the three months from October to December, it said national output expanded at an annual rate of 3.8 per cent instead of 3.9 per cent as it estimated a month ago.

The revised growth figures may go a little way towards reassuring the Federal Reserve, which has been adopting a hawkish approach to monetary policy and last week increased its federal funds rate. Market sources are expecting that rise in the funds rate to be followed by a rise in the Fed's discount rate despite the modest revision down of the fourth quarter figures.

The final revised figure for fourth quarter GDP was slightly below forecasts from Wall Street economists, who had expected it to be revised upwards slightly to 4 per cent.

Most economists anticipate that during the first quarter, which ends this Monday, GDP growth will slow modestly to around 3 per cent.