WASHINGTON - The US economy increased 2.8 percent year-on-year in the fourth quarter of 2011, the fastest pace of the year, the Commerce Department said in a report on Friday.

The fourth-quarter real gross domestic product (GDP) was a considerable increase from the revised 1.8 percent in the third quarter, but fell short of economists' wide expectation of 3 percent.

Stronger personal household consumption, and an upturn in business inventory and residential fixed investment contributed to the uptick in the fourth quarter.

The real GDP in the country increased 1.7 percent in 2011, compared with an increase of 3 percent in 2010, the report said.

Real personal consumption expenditures, which account for more than two-thirds of the US economy, rose 2 percent in the fourth quarter, up from a 1.7 percent pace in the third quarter.

Real nonresidential fixed investment increased 1.7 percent in the fourth quarter, much slower than the 15.7 percent growth in the third quarter. Real residential fixed investment increased 10.9 percent, compared with an increase of 1.3 percent in the previous quarter.

Real exports of goods and services increased 4.7 percent, the same pace as the third quarter. Real imports, which are a subtraction in the calculation of the GDP, increased 4.4 percent in the four quarter, faster than the 1.2 percent in the previous quarter.

Real federal government spending decreased 7.3 percent in the fourth quarter, in contrast to an increase of 2.1 percent in the third quarter.

Business inventory spending surged to an estimated $56 billion in the fourth quarter after a 2 billion decline in the third quarter. The change contributed 1.94 percentage points to the fourth-quarter change in the real GDP.

The Commerce Department is scheduled to release the second estimate of the fourth-quarter GDP figures on Feb 29.