Economy Shows Solid Growth at End of 2006 The government's latest figures on the economy show that the gross domestic product grew at an annual rate of 3.5 percent in the fourth quarter of 2006, a stronger showing than many analysts had expected.
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Economy Shows Solid Growth at End of 2006

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Economy Shows Solid Growth at End of 2006

Economy Shows Solid Growth at End of 2006

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RENEE MONTAGNE, Host:

Our business news starts with a surprise from the economy.

(SOUNDBITE OF MUSIC)

MONTAGNE: Here's NPR's Jack Speer to tell us about it.

JACK SPEER: Perhaps you remember the dire predictions from the analysts. The falloff in housing threatened to drag down the entire economy. High-energy prices would put the kibosh on consumer spending, and runaway inflation was poised to take off. David Wyss is an economist at Standard & Poor's. He says in the end, that none of those things happened in the final three months of last year.

DAVID WYSS: First of all, the consumer was out there really spending his heart out at Christmas. It's a very good Christmas for the retailers. Consumer spending in real terms was up 4.4 percent for the quarter. And that's an extremely strong performance. We also saw a continued solid capital spending - equipment spending was up 2.8 percent. And most importantly, the trade deficit - which has been a drag on the economy for a long time - improved.

SPEER: As for the predictions about the effect of housing on the economy, Wyss says while that sector did take a hit, on its own, it wasn't big enough to drag down the entire economy.

WYSS: Housing did above what we thought. It was down 19 percent. That's a huge drop. Remember, it's only 6 percent of the economy. And it was offset to some extent by the fact that we still had a pretty good strength in non-residential investment.

SPEER: Jack Speer, NPR News, Washington.

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