According to US Commerce Department figures, the world’s largest economy expanded at a 2.8% annual pace in the fourth quarter of 2011 – and the fastest pace in a little over 1 1/2 years.  The anticipated figure was lower than what most had expected, with forecasts averaging about a 3% gain for the quarter.  Unfortunately, the slight pickup was unable to support any upside in the full year figure – which showed a 1.7% gain, down from 3% in the year prior.

Consumers still concerned over the condition of the US labor market reined in spending habits, leading to a lower overall growth figure.  The losses in consumer interest continue to persist even as stores and major chains make major price reductions in an effort to gain market share.  According to the most recent Commerce Department report, retail sales in December gained by a worse than anticipated 0.1%, the weakest in 7 months.  Further declines in consumer interest are likely to continue to weigh on economic growth for quarters to come.  As a result, many in the market are looking towards passage of new monetary stimulus in the coming months by the Federal Reserve – hopefully boosting consumption and expansion in the country.

Incidentally, it seems that the GDP report’s only silver lining remained in the business sector – which showed a promising 5.2% pickup in corporate spending.  The figures are in line with actual headline numbers from recent durable orders reports and indicates a possible shift in sentiment among business leaders.

The jolt of corporate optimism looks to be shared with the consumer sector according to today’s University of Michigan Consumer Sentiment Index.  Published in conjunction with Thomson Reuters, the consumer sentiment survey ticked higher to a reading of 75 – the highest level in almost 12 months.  The current headline reading is an improvement over December’s 69.9 print and could be reflective of further growth in the next six months.