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Economic analysts have increased their forecasts for the fourth quarter, and say the U.S. economy may end 2011 growing at its fastest rate in 18 months.  J.P. Morgan economists now see a gross domestic product (GDP) increase of 3% for Q4, up from a previous forecast of 2.5%.  The prediction comes just a few months after an economic slowdown raised concerns among investors.

According to the U.S. Department of Commerce, the economy grew at a 3.2% annualized rate in the fourth quarter of last year, raising hopes that the recession is truly a thing of the past and 2011 will be even better than 2010. The fourth quarter growth rate is more than 20% better than the 2.6% rate in the previous quarter and the best quarterly increase since the start of 2010.

For all of last year, the economy grew 2.9% — the most since 2005. A key driver of that growth was increased consumer spending, which rose at 4.4%. That pace, the fastest since 2006, was due mainly to increased purchasing of furnishings, appliances, cars, and clothes.

Although the job market hasn't shown much improvement since the recession began, projections for job growth in 2011 are optimistic. That's because the earliest signs of revival are there.

Businesses increased their payrolls by 103,000 workers in December, for example, and the Labor Department recently revised its initial estimates of October and November job gains upward by 70,000. Furthermore, unemployment fell to 9.4% from 9.8% in November (although that drop partly reflected people who have simply stopped looking for work).