Play it easy, Mr. G.

THOSE with a long memory may recall talk in early Reagan years of the economy ``growing out of the deficit.'' National output would grow fast enough to produce sufficient revenues to eliminate the federal budget deficit. That may at last be happening - to a degree, anyway. Earlier this week the Treasury Department reported that the deficit for the first four months of the fiscal year that began last October amounted to $65.81 billion. That is down slightly from $66.29 billion for the first four months of fiscal 1987.

Progress would have been greater had not some expenditures been dumped from fiscal 1987 into fiscal 1988. Progress would have been slower if the economy had not grown faster than most economists, including those in government, anticipated. Last year's economic growth was reported yesterday to be 3.9 percent, well above the 2.7 percent expected by President Reagan's Council of Economic Advisers.

Such solid growth, if it continues, should help further to trim the deficit, anticipated by Mr. Reagan's new budget to be $146.74 billion for fiscal 1988. That is only a modest reduction compared to the $70 billion decline in the deficit between fiscal 1986 and fiscal 1987. But it assumes economic growth of only 2.4 percent this year, only 0.2 points above the consensus of forecasters - that is, relatively modest growth compared to the administration's usual projections.

This situation indicates that there is still reason for optimism over the budget deficit.

However, it also points to the importance of avoiding a recession. The economic expansion in the United States is now in its 63rd month, and there is no special reason it should end. Nonetheless, it is important that the Federal Reserve System which supplies the money that greases the wheels of commerce continue to do so at a reasonable pace.

Federal Reserve Chairman Alan Greenspan told Congress Tuesday that the Fed had eased its grip on credit a few weeks ago, allowing interest rates to decline. That's welcome news. With October's stock-market crash and some mixed economic signs, it would be better at this moment for the Fed to err on the side of monetary ease.

Fighting too hard against inflation could push the economy into a slump, which would balloon the deficit into even bigger numbers, make unemployment rise, and cause more bankruptcies.

Play it easy, Mr. Greenspan.

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