Gross domestic product—a broad measure of all goods and services produced—grew at a 3.2% annual rate in the fourth quarter. That's up from the 2.6% pace notched the quarter before and confirms the view held by many economists and stock-market investors that the economy is gaining enough momentum to start bringing down unemployment in the months ahead.
The expansion in large part was fueled by a jump in consumer spending—a crucial change from earlier in the recovery, when growth relied heavily on businesses investing and building up inventories. Final sales—a measure that gives a feeling for underlying demand in the economy by subtracting the change in business inventories from GDP—notched its biggest increase since 1984, growing 7.1% in the fourth quarter. This reviving demand bodes well for 2011, because businesses could take it as a signal to stock their shelves and hire workers."