US economy exceeds expectations in latest quarter, boosting hopes for avoiding recession

Gross domestic product, adjusted for inflation, grew at a 3.3% annual rate.

The U.S. economy slowed in its latest quarter but performed much better than forecasters expected, boosting optimism about the nation's prospects for averting a recession.

Gross domestic product, adjusted for inflation, grew at a 3.3% annual rate over the final three months of last year, according to data from the U.S. Commerce Department.

Growth decelerated significantly from the previous quarter but still exceeded economist expectations by more than a percentage point.

The fresh data also showed that a gauge of "core" price increases -- which strips out volatile food and energy costs -- rose 1.9% in the latest quarter, putting it directly in line with the Federal Reserve's target inflation rate.

The government report reinforced optimism among many observers that the U.S. could avert an economic downturn, achieving a "soft landing" in which price increases return to normal levels while the economy continues to grow.