The U.S. economy grew at a 2.8 percent annual rate in the fourth quarter of 2011, the fastest growth in more than a year, the government said Friday in a report that suggested slower growth in early 2012. The Commerce Department reported that fourth-quarter gross domestic product (GDP) growth was up sharply from the 1.8 percent annual rate seen in the third quarter and was the fastest pace of expansion since the second quarter of 2010. However, for all of last year, the U.S. economy grew only 1.7 percent, roughly half of the growth seen in 2010 and the worst since the 2007-2009 recession. Growth in 2011 was limited by the biggest annual government spending cuts in four decades, particularly sweeping defense cuts at the beginning and end of the year. The fourth-quarter results were assisted by consumer spending, which rose 2 percent during the period, up modestly from the July-September quarter. Most of the increase in spending was attributed to a 14.8 percent surge in sales of autos and other expensive manufactured goods. Consumer spending accounts for 70 percent of U.S. economic activity. Fourth-quarter growth also was helped by the rebuilding of business inventories, which was the fastest since the third quarter of 2010, after they declined in the third quarter for the first time since late 2009. Inventories increased by $56 billion, adding 1.94 percentage points to GDP growth. Excluding inventories, the economy grew at a weak 0.8 percent rate, a sharp decline from the third quarter's 3.2 percent pace. The strong accumulation of inventories suggests the economic recovery will lose momentum in early 2012. Also pointing to slower growth, business spending on capital goods was the slowest since 2009, a sign that debt crisis in Europe was beginning to affect businesses.
