US economy expands by 2.8% The US economy grew 2.8 per cent in the final three months of 2011 as consumers ramped up spending and businesses boosted production. The commerce department's first reading of gross domestic product growth in the fourth quarter was slightly below economists" expectations of a 3 per cent annualised pace but an acceleration from the third quarter's tepid 1.8 per cent increase. Growth was lifted by a 2 per cent rise in consumer spending, compared with 1.7 per cent in the third quarter, but that was lower than the 2.4 per cent forecast. Futures on the three leading US stock exchanges were slightly lower following the news. Stuart Hoffman, chief economist at PNC Financial Services, said ahead of the data release that he expects GDP growth to be "a trend-like 2.4 per cent in 2012, and job growth will average about 140,000 per month, adding up to 1.7m new payroll jobs over the course of this year." The report followed the Federal Reserve's downgrade of US growth estimates in the coming quarters from "moderate" to "modest" as the central bank said it would likely keep interest rates at record-low levels through 2014. "Strains in global financial markets continue to pose significant downside risks to the economic outlook," the Federal Open Market Committee warned in its latest policy statement. Ben Bernanke, chairman, also said a further round of monetary easing was possible to keep the recovery from faltering. The Fed noted that "the economy has been expanding moderately, notwithstanding some slowing in global growth." In recent weeks a slew of economic indicators has pointed to a firming recovery, particularly in the labour market and the manufacturing sector, which has remained relatively strong in the wake of the recession. On Thursday, the commerce department reported that orders for long-lasting durable goods rose a stronger-than-expected 3 per cent in December as demand for transportation equipment surged and businesses boosted their capital spending. Meanwhile, the trend in new applications for unemployment insurance continued to move lower last week as businesses slowed their pace of lay-offs. The unemployment rate fell to 8.5 per cent last month - the lowest level in nearly three years - as the economy recorded a 200,000 net gain in jobs. Economists said that if the jobless rate continues to decline, consumers may be encouraged to further ramp up their spending, which could accelerate the pace of recovery. "Job gains could be stronger than expected, leading consumers to spend more, spurring faster recoveries in autos and housing," Mr Hoffman said.