The U.S. economy accelerated sharply in the fourth quarter of 2011, expanding at an annual rate of 2.8%, just as growth in Europe was grinding to a halt.

Official figures showed that GDP expanded by around 0.7% quarter-on-quarter in the last three months, or 2.8% if the growth rate was maintained for a year. Although a slightly weaker performance than Wall Street investors had expected, it was still far stronger than the U.K., where the economy contracted at the end of 2011.

Consumer spending expanded at an annual rate of 2%, according to the US Department of Commerce, and net exports were also positive, helping to offset falling public spending.

However, there were some indications that the strong growth might not be sustained. The department said that almost 2% of the 2.8% GDP growth was accounted for by firms rebuilding their stocks of goods – an effect that is likely to be temporary.

At the same time, consumers were dipping into their savings to maintain spending: the savings ratio declined to 3.7%, its lowest level since the end of 2007.

The performance of the U.S. economy will be critical in the run-up to this year's presidential election, when President Barack Obama will have to run on his economic record. Sharp declines in unemployment in recent months have raised hopes that the economy is past the worst.

But with the euro-zone crisis still unresolved, and sharp cuts in public spending due in 2012, there are growing questions about how long the U.S. will continue to grow.

"The economy ended 2011 on a fairly positive note, but the composition of growth in the last quarter is not favorable for growth early this year," said Ryan Sweet, a senior economist at Moody's Analytics.

Federal Reserve chairman Ben Bernanke hinted earlier this week that a fresh round of quantitative easing might be needed to prop up the economy in the coming months.

In 2011 as a whole, the U.S. economy expanded by 1.7%, according to Friday's figures, compared with 3% in 2010.

Chris Williamson, chief economist at data provider Markit, said, "U.S. consumers remain concerned about debt, job security and the housing market, which will stifle domestic demand. At the same time, companies face an uncertain climate both at home and abroad, with the euro-zone's sovereign debt crisis remaining a key cause of concern. That's not to say that the U.S. is likely to slip into contraction either. Instead, the likelihood is for a period of steady and unspectacular growth."

Marcus Bullus, trading director at MB Capital, was more upbeat – commenting that Obama's re-election campaign was enjoying a "dream start".

"The fourth-quarter GDP figures may have undershot predictions. But any disappointment should be mitigated by one plain truth – they are the best evidence yet that the American economic giant is stirring from its slumber," said Bullus.

Intellpuke: You can read this article by The Observer's Economics Editor Heather Steward in context here: www.guardian.co.uk/business/2012/jan/27/us-economy-pace-final-quarter