2013 GDP less than 2%

WASHINGTON (AP) — The U.S. economy grew at a 3.2 percent annual rate in the October-December quarter on the strength of the strongest consumer spending

in three years, an encouraging sign for 2014.

The fourth-quarter increase followed a 4.1 percent growth rate in the July-September quarter, when the economy was boosted by a buildup in business stockpiles.

The Commerce Department says that for 2013 as a whole, the economy grew a tepid 1.9 percent, below the 2.8 percent increase in 2012. Growth was held back last year by higher federal taxes and government spending cuts.

With that drag removed, many economists think growth could top 3 percent in 2014, which would be the best performance since the recession ended in mid-2009.

Also today, the Labor Department reported weekly applications for U.S. unemployment benefits rose 19,000 last week to 348,000, the highest in about a month. But the broader trend in applications remains low.

The Department says that the four-week average, a less volatile measure, increased just 750 to 333,000. The increase follows three weeks of declines.

The average is close to pre-recession levels and suggests that, despite last week's rise, layoffs remain low. But hiring will need to pick up to cut the still-high 6.7 percent unemployment rate.

Employers added just 74,000 jobs in December, the fewest in three years and far below the average of 214,000 added in the previous four months. Most economists forecast that hiring will rebound in January to roughly the 185,000 average monthly job gains of the past two years.