Washington • The American economy may not be truly healthy yet, but it’s healing.
The 2.8 percent annual growth rate reported Friday for the fourth quarter was the fastest since spring 2010 and was the third straight quarter that growth has accelerated.
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Experts cautioned, however, that the pace was unlikely to last and that it’s not enough to sharply drive down the unemployment rate.
Unemployment stands at 8.5 percent — its lowest level in nearly three years after a sixth straight month of solid hiring. And Friday’s Commerce Department report suggests more hiring gains ahead.
For the final three months of 2011, Americans spent more on vehicles, and companies restocked their supplies at a robust pace.
Still, overall growth last quarter — and for all of last year — was slowed by the sharpest cuts in annual government spending in four decades. Many people are reluctant to spend more or buy homes, and many employers remain hesitant to hire, even though job growth has strengthened.
The outlook for 2012 is slightly better. The Federal Reserve has estimated economic growth of roughly 2.5 percent for the year, despite abundant risk factors: federal spending cuts, weak pay increases, cautious consumers and the risk of a European recession.
Economists noted that most of the growth in the October-December quarter was due to companies restocking their supplies at the fastest rate in nearly two years. That pace is expected to slow.
Economic growth is measured by the change in the gross domestic product, or GDP. The GDP reflects the value of all goods and services — from machinery to manicures to hotel bookings to jet fighters — produced in the United States.
Friday’s estimate of GDP growth was the first of three for the October-December quarter. The figure will be revised twice, in February and then in March.
"The pickup in growth doesn’t look half as good when you realize that most of it was due to inventory accumulation," said Paul Ashworth, an economist at Capital Economics.
Ashworth expects annualized growth to slip below 2 percent in the current January-March quarter. Other economists have similar estimates. In a normal economy, roughly 3 percent growth is a healthy figure. It’s enough to keep unemployment down — but not so much growth as to ignite inflation.
But coming out of a recession, much stronger growth is needed. By some estimates, the economy would have to expand at least 5 percent for a full year to drive down the unemployment rate by 1 percentage point.
In many ways, the economy did end 2011 on a strong note. Companies invested more in equipment and machinery in December.
People are buying more cars, and consumer confidence has risen. Even the depressed housing market has shown enough incremental gains to lead some economists to detect the start of a turnaround.
In the final three months of 2011, consumer spending grew at a 2 percent annual rate. That was up modestly from the July-September quarter. Consumer spending is critical because it fuels about 70 percent of the economy.
Much of the growth was powered by a 15 percent surge in sales of autos and other long-lasting manufactured goods.
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