Growth in the U.S. economy nearly came to a halt in the final quarter of last year, with crises in the housing and credit markets forcing consumers and businesses curb spending and investing, new U.S. government data showed on Thursday. The U.S. Commerce Department reported that the gross domestic product increased at a 0.6 percent pace in the October-to-December quarter. The reading, while unchanged from an initial estimate a month ago, makes clear the weakness of the U.S. economy. Just one quarter earlier, the economy grew at a 4.9 percent pace. Economists had expected the newly released fourth-quarter GDP would have been bumped up to a 0.8 percent growth rate. In the housing market, new data showed no signs of a reprieve. Builders cut spending on housing projects by a 25.2 percent on an annualized basis in the fourth quarter, the biggest cut in 26 years. The data also showed a worrying and unexpected rise in inflation, despite the relative economic stagnation. Also Thursday, the U.S. Labor Department said that new applications for unemployment insurance benefits rose by 19,000 to 373,000 last week. The National Association for Business Economics expects economic growth in the current January-to-March quarter to slow to a meager 0.4 percent pace, though some analysts fear the figure will be worse. A gauge of inflation linked to the GDP report showed that “core” prices - excluding food and energy - grew at a rate of 2.7 percent in the fourth quarter. The reading was up from the third quarter's 2 percent pace. The figure also falls outside of the Federal Reserve's so-called comfort zone, the top of which is 2 percent. One positive note in the report was the 4.8 percent pace of sales of U.S. goods and services to other countries in the fourth quarter. That figure was better than expected and partly due to the declining value of the U.S. dollar. Overall, however, for all of 2007, the economy grew by 2.2 percent, the weakest showing in five years.
