The U.S. economy increased at an annual rate of 1.6 percent in the fourth quarter of 2005, the slowest pace in three years but higher than the 1.1 percent rate reported at the end of January, the Commerce Department said on Tuesday.
A report by the department said personal consumer spending, which accounts for about two-third of U.S. gross domestic product (GDP) and is the major engine of economic growth, increased by 1.2 percent in the final quarter of last year, compared with an increase of 4.1 percent in the third quarter. It was slightly higher than the 1.1 percent gain reported a month ago.
Businesses spending on structures and equipment was higher than first thought. Business investment spending rose at a rate of 5.4 percent, compared with an originally reported 2.8 percent advance.
U.S. government spending was also a touch stronger than first estimated, as were export sales. However, the upward revision in exports was more than offset by higher imports, and the U.S. trade gap sliced nearly 1.5 percentage points off growth.
Gross domestic product measures the value of all goods and services produced within the United States and is considered the best gauge of the economy's performance.
U.S. economic growth in the final quarter of last year was the slowest since a 0.2 percent gain in the last quarter of 2002.
However, many economists say the U.S. economy is already rebounding smartly from the end-of-year lull. They predict the U.S. economy will gain at a robust 4.5 percent pace in the current January-to-March quarter.