The economy snapped out of a sluggish spell and grew at a faster-than-expected 3.5 percent pace in the final quarter of last year as consumers ratcheted up spending despite a housing slump, the Associated Press reported.

A report released by the U.S. Commerce Department today showed the economy has managed to keep on moving despite the ill effects of the residential real estate bust and an ailing automotive sector.

The economy’s performance in the October-to-December quarter, which followed two quarters of rather listless activity, exceeded analysts’ forecasts for a 3 percent growth rate.

The economy opened 2006 on a strong note, growing at a 5.6 percent pace, the fastest in 2½ years. But it lost steam during the spring and late summer. It grew at a 2.6 percent pace in the second quarter and then a weaker 2 percent pace in the third quarter. For all of 2006, the gross domestic product increased by 3.4 percent. That was an improvement from a 3.2 percent showing in 2005 and the strongest growth rate in two years.