U.S. Economy Grows 3.5%; Inflation Gauge Falls Sharply

Goldilocks economy if there ever was one.

The U.S. economy resurged at the end of 2006, overcoming a slump in housing as consumers, sustained by lower energy prices, ramped up spending.

Gross domestic product climbed at a seasonally adjusted 3.5% annual rate October through December, the Commerce Department said Wednesday in its first of three readings on fourth-quarter GDP. That was up from 2% in the third quarter. A price inflation gauge within the report posted its biggest drop in 52 years.