Economy expanded 5.7 percent in 4Q, the fastest in past 6 years

U.S. broadest measure of economic activity, gross domestic product, expanded at an annual rate of 5.7 percent in the fourth quarter, after a 2.2 percent increase the previous quarter. The growth rate was the fastest since the third quarter of 2003, when the economy grew at a rate of 6.9 percent.

Even though the fourth-quarter surge, the economy finished 2009 with its biggest contraction since 1946, when the country was still cooling off from World War II.

The single biggest factor in the strong growth rate last quarter was not consumers buying more, but businesses letting their stockpiles shrink at a slower rate than they had been previously.

As long as the labor market remains weak, consumers will be reluctant to spend money. That means businesses will need to look for other sources of demand, like exports. On net, the economy lost 208,000 nonfarm payroll jobs last quarter, and the unemployment rate rose to 10 percent, from 9.7 percent.

The nation’s output number can be subject to major revisions, especially when the economy is at a turning point. The annual growth rate initially reported by the government for the third quarter of 2009 was 3.5 percent, but was later revised to 2.2 percent. The government’s final tally of last quarter’s output will be released in March.