WASHINGTON -- 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.
That growth is boosting hopes for a stronger 2011. But it remains too weak to ease the high unemployment.
The U.S. Commerce Department reported Friday that growth rose at an annual rate of 3.2 percent in the October-December quarter. That's better than the 2.6 percent growth in the previous quarter. It was the best quarterly showing since the start of 2010.
The economy has consistently picked up speed since hitting a rough patch in the spring. For all 2010, the economy grew 2.9 percent, the most since 2005. It was an improvement from 2009, when the economy suffered its worst decline in more than 60 years.
All told, the economy produced $13.38 trillion worth of goods and services last year, a record. It surpassed the prerecession peak reached in the fourth quarter of 2007.
Still, the economy is not growing fast enough to drive down unemployment, which was 9.4 percent in December. It takes about 3 percent growth just to create enough jobs to keep pace with the population increase. By some estimates, growth near 5 percent for a full year is needed to drive down the jobless rate by 1 percentage point.
Increased consumer spending was a key reason the economy grew more strongly. Americans boosted their spending at a 4.4 percent pace, the most since 2006. They spent more on furnishings, appliances, cars and clothes.
That is largely why economists are more optimistic about the economy's performance this year. Consumer spending is roughly 70 percent of U.S. economic activity.38.89037 -77.03196 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.