The economy gained strength at the end of last year as Americans spent at the fastest pace in four years and U.S. companies sold more overseas. The growth is boosting hopes for a stronger 2011. The Commerce Department reported today growth rose to an annual rate of 3.2% in the October-December quarter. That’s better than the 2.6% growth in the previous quarter. And it was the best quarterly showing since the start of last year. The economy has now consistently picked up speed since the slowdown experienced in the spring.
For all of last year, the economy grew 2.9%, the most since 2005. It was an improvement on 2009, when the economy suffered its worst decline in more than 60 years. Increased consumer spending was a key reason the economy grew more strongly. Americans boosted their spending at a 4.4% pace, the most since 2006. They spent more on furnishings, appliances, cars and clothes.
Because consumer spending accounts for much of the overall economic activity, the boost has made economists more optimistic about the economy’s performance this year. After the recession ended in June 2009, consumers continued spending at cautious levels. At the end of last year, though, that began to change. Looking ahead, economists expect consumer spending will rise 3.2% or more for all of 2011.
