Economy grew 2.8 percent during the fourth quarter of 2011

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The U.S. economy grew at a faster pace during the fourth quarter of 2011 as gross domestic product (GDP) increased 2.8 percent, according to The Washington Post.

The fourth quarter figure is an improvement compared with the third quarter, when GDP increased 1.8 percent. However, government spending cuts held back growth during the October-December quarter and 2011 as a whole; the economy grew 1.7 percent in 2011, which is about half the growth in 2010 and the worst since the recession.

Consumer spending increased 2 percent during the fourth quarter, which is slightly better than the third quarter. Much of the growth was spurred by a 14.8 percent increase in sales of autos and other long-lasting manufactured goods.

Government purchases fell at a 4.6 percent annual rate during the fourth quarter and 2.1 percent for the year; this was the biggest decline since 1971.

However, other data show the economy ended strongly in 2011 as companies invested more in equipment and machinery; the unemployment rate fell to 8.5 percent; consumer confidence is rising; and economists predict the housing market is beginning to turn around.

The Federal Reserve forecasts the economy will grow 2.7 percent this year.

1/30/2012

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