Consumer spending helps boost overall economic growth, renewing hopes that the recovery will hit its stride this year.

By Don Lee and Andrew Tangel
January 30, 2014, 5:48 p.m.

WASHINGTON — U.S. consumer spending ended last year with a flourish, lifting overall economic growth and renewing hopes that the recovery will hit its stride this year and boost employment and incomes.

The economy expanded at a solid 3.2% annual rate in the fourth quarter, the government estimated Thursday. Figures showed that people ate out more and bought more cars, clothes and other goods and services. Rising exports and a rebound in business spending for equipment also helped.

Growth was “pretty impressive,” especially after taking into account the nearly three-week partial federal government shutdown at the start of October, said Paul Ashworth, an economist at Capital Economics.

The Commerce Department estimated that the government shutdown clipped 0.3 of a percentage point from growth in the fourth quarter. Without that hit and other federal spending cuts, fourth-quarter growth would have matched the third-quarter rate of 4.1%.

The drag from higher taxes and budget spending reductions enacted last year has largely receded, to the point where analysts believe that the government sector will have a neutral effect on overall economic growth going forward.

That means consumer spending and business investment will write the economic recovery story this year, and the fourth-quarter data suggested that at least there was good momentum heading into this year.

Personal spending, which accounts for more than two-thirds of U.S. economic activity, accelerated 3.3% in the final three months of last year — the fastest pace in three years.

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