Economy much weaker than expected

We are in for a much tougher 2008 than was first anticipated.

NEW YORK (CNNMoney.com) -- The economy grew at a much slower pace in the last three months of the year, according to a government report Wednesday.

The report raised fears of a recession and increased hopes that the Federal Reserve will make another significant interest rate cut.

The gross domestic product, the broadest measure of the nation's economic activity, grew at an annual rate of 0.6%, adjusted for inflation, in the fourth quarter, according to the Commerce Department, down from 4.9% in the final reading of growth in the third quarter. Economists surveyed by Briefing.com had forecast GDP would slow to a 1.2%.

The anemic growth in the fourth quarter matched the slowest expansion in the economy in the last five years. The report comes amid rising concern that the U.S. economy is falling into a recession, with some economists arguing the downturn started in the final month of 2007.