WASHINGTON (AP) -- The U.S. economy grew at a slightly faster but still anemic rate at the end of last year. However, there is hope that growth accelerated in early 2013 despite higher taxes and cuts in government spending.
The economy grew at an annual rate of 0.4 percent in the October-December quarter, the Commerce Department said Thursday. That was slightly better than the previous estimate of 0.1 percent growth. The revision reflected stronger business investment and export sales.
Analysts think the economy is growing at a rate of around 2.5 percent in the current January-March quarter, which ends this week.
Steady hiring has kept consumers spending this year. And a rebound in company stockpiling, further gains in housing and more business spending also likely drove faster growth in the first quarter.
The 0.4 percent growth rate for the gross domestic product, the economy's total output of goods and services, was the weakest quarterly performance in almost two years and followed a much faster 3.1 percent increase in the third quarter. The fourth quarter was hurt by the sharpest fall in defense spending in 40 years.
For all of 2012, the economy grew 2.2 percent after a 1.8 percent increase in 2011 and a 2.4 percent advance in 2010. Since the recession ended in mid-2009, the economy has been expanding at sub-par rates as a string of problems from higher gas prices to Europe's debt crisis have acted as a drag on the U.S. economy.
Growth appears to be strengthening this year even after taxes increased on Jan. 1 and automatic government spending cuts totaling $85 billion started to take effect on March 1. The Congressional Budget Office has estimated that the combination of tax increases and spending cuts could trim economic growth this year by about 1.5 percentage points. The CBO is predicting just 1.5 percent growth for 2013.
But so far, the economy is showing signs of holding its own against the fiscal drag.