The U.S. economy grew at an annual rate of 3.5 percent in the fourth quarter of 2006, outpacing predictions by most economists, according to preliminary estimates by the U.S. Department of Commerce.
Third quarter growth was 2 percent. Economists had generally expected fourth quarter growth to be around 3 percent.
Government analysts said the fourth quarter increase in real GDP was driven mainly by higher personal consumption expenditures, exports, state and local government spending and federal government spending. However, those increases were partly offset by declines in residential fixed investment and inventory investment. Imports, which are subtracted from the GDP calculation, decreased.
Personal expenditures for durable goods rose 6 percent in the fourth quarter versus 6.4 percent in the third quarter. Personal expenditures for nondurable goods rose 6.9 percent, compared with a 1.5 percent increase in third quarter. Nonresidential fixed investment decreased 0.4 percent following a 10 percent increase in third quarter. Investment in nonresidential structures rose 2.8 percent versus 15.7 percent. Residential fixed investment fell 19.2 percent versus 18.7 percent. Exports of goods and services were up 10 percent in fourth quarter, compared with a 6.8 percent increase in third quarter. Imports of goods and services decreased 3.2 percent versus 5.6 percent.
The price index for domestic purchases edged up 0.1 percent compared to a 2.2 percent increase the previous quarter. Excluding food and energy prices, the index rose 2.3 percent versus 2.2 percent in third quarter.