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The economy is coming off its weakest quarter of growth in nearly two years, according to a government report released Thursday. The Commerce Department estimated that the economy grew at an annual rate of just 0.1 percent in the October-December quarter, much slower than the 3.1 percent growth in the July-September quarter. Still, economists said the weakness in the fourth quarter was caused by temporary factors
-- deep defense spending cuts and slower restocking by companies. They expect growth will rebound to a rate of around 2 percent in the current January-March quarter. They note that residential construction, consumer spending and business investment
-- core drivers of growth -- all improved in the fourth quarter. Businesses and consumers are also showing greater confidence despite the automatic spending cuts scheduled to take effect on Friday. A measure of consumer confidence rebounded in February after a sharp fall the previous month that likely was a result of the tax increase. Companies, meanwhile, sharply increased orders in January for a category of long-lasting manufactured goods that reflect their investment plans. That suggests they are confident about their business prospects. The consumer spending report showed that inflation remains subdued. A price gauge tied to consumer purchases showed no increase in January and since January 2012 is up just 1.2 percent. That's the lowest 12-month increase since October 2009.
[Associated
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