WASHINGTON – The U.S. economy grew at a weaker-than-expected rate in the final three months of last year, the government's latest estimate on Wednesday showed, as businesses built fewer inventories and consumers spent less.
Gross domestic product or GDP, the broadest measure of overall economic activity within U.S. borders, expanded at a rate of 2.2 percent in the fourth quarter of 2006. That was revised down from the 3.5 percent advance in the government's prior estimate.
The Commerce Department's latest estimated was slightly weaker than the 2.4 percent advance economists polled by Reuters were expecting.
For the year, the economy grew at a 3.3 percent rate, down from the 3.4 percent earlier estimate.
In a sign businesses are becoming wary about the economy's health, non-residential spending fell by 2.4 percent during the quarter. It was the first decline since the first quarter of 2003, and was much weaker than the government's initial estimate of a 0.4 percent fall.
On the inflation front, the closely watched personal consumption expenditures price index declined 0.9 percent, the biggest fall since 1954.
Adding to evidence of a troubled housing market, spending on new home building tumbled by 19.1 percent during the quarter, the worst quarterly reading since a 21.7 percent decline in the first three months of 1991.
During the fourth quarter, personal spending advanced at a 4.2 percent annual rate, somewhat weaker than the prior 4.4 percent estimate. For the year, spending advanced by 3.2 percent, slightly less than the 3.5 percent gain in 2005.
Imports of both goods and services declined less than first estimated during the quarter. The Commerce Department said they fell by a 2.2 percent annual rate, a smaller decrease than the 3.2 percent decline in the government's prior estimate.
Exports during the quarter rose 10.5 percent, slightly more than the 10.0 percent gain first estimated.