The U.S. economy grew at an annual rate of 2.5% in Q4, the U.S. Commerce Department announced Thursday, slightly above the 2.2% consensus estimate.

The stat represents the U.S. government's final revision for Q4 GDP. The government's initial estimates had projected 3.5% growth for the last quarter of 2006. Hence, the 2.5% stat represents a substantial under-performance by the world's largest economy.

Slowing corporate earnings growth and business investment, combined with initial signs of a pull-back in consumer spending, and sub-prime loan defaults have economists concerned that the U.S. economy may slow too much in the first half of 2007 -- perhaps flirting with a recession. In 2006, the U.S. Federal Reserve increased short-term interest rates to slow the U.S. economy and take pressure off commodity prices, which had helped feed inflation.

Fly Analysis: The Q4 stat provides further evidence that the U.S. Federal Reserve has slowed the U.S. economy, as intended. The 2.5% stat represent moderate, sustainable growth -- one that in and of itself should not accelerate pressure on prices. It's an acceptable growth rate for the Fed -- not too fast and not too slow -- and one that further supports the Fed's neutral short-term interest rate policy stance to date in 2007. Along with upcoming inflation data, the Fed will now await further statistics for Q1 to determine if the economy is continuing to slow, of in growth has started to re-accelerate -- factors that will help determine monetary policy as 2007 progresses.

Economists are more optimistic about the U.S. economy and about economic growth than they been in the past, according to a Bloomberg survey. Here are some of the highlights from the survey:

• The economy will expand at a 2.5% annual pace this quarter and 2.6% in the second quarter, up from last month's forecasts of 2.3% and 2.5% respectively.
• Consumer spending will grow at an annual rate of 3% this quarter, and 2.5% in the second
• Economic growth this year will average 2.7%
• The Fed will hold its target rate at 5.25% percent through the third quarter, and may cut the rate to 5% percent in the fourth.
• Consumer prices are forecast to rise 2.1% this quarter -- unchanged from last month.
• unemployment rate will remain at the January rate of 4.6% for the rest of this quarter, lower than last month's forecast of 4.7%. But the jobless rate will edge higher later this year, averaging 4.8% in the last half.

Meanwhile, economists the strong January same-store sales of 3.7% as a positive, saying job and income growth is driving spending despite the slumping housing market that lowers values of Americans' homes. Even the last Fed's statement suggested the economy is firmer while inflationary pressures have improved.

The question is whether Americans feel the same way as economists do. Well, today consumer confidence was reported to have climbed to a 2 1/2-year high in February just as the president's job-approval rating sank to 32%. Americans, it seems, despite lingering concerns about the housing and automotive markets, are feeling even better about job prospects, the current economic climate and investment opportunities.