Preliminary estimate: U.S. GDP grows 2.8% in fourth quarter 2011

U.S. Economic Recovery Slowly Gained Momentum in Late 2011

Preliminary government estimates that the U.S. economy grew 2.8% in the final three months of 2011, propelled by increases in consumer spending and business inventories. The pace of growth was faster than in the third quarter, when gross domestic product expanded at an annual rate of 1.8 percent.

The increase in gross domestic product was the fastest in a year and a half. Even so, the figure was below the average speed of economic expansion in the United States since World War II.

The 2.8 percent rate is likely to be seen as something of a relief, given many economists were predicting the country would soon dip back into recession.

Inventory spending surged to an estimated $56 billion after a $2 billion decline in the third quarter, the Commerce Department reported. Consumer spending rose 2.0%, compared to 1.7% in the third quarter. Exports climbed 4.7% while imports rose 4.4%. Real final sales in the U.S., which exclude imports and inventories, rose just 0.9% after a 2.7% increase in the third quarter.

One of the biggest drags on growth in the last quarter was government spending cuts at the federal, state and local levels, according to the Commerce Department report. Strapped state and local governments are likely to continue cutting back in 2012, as they have done nearly every quarter for the last several years.