An inflation gauge in the report advanced at just a 1.2 percent pace, down from 1.6 percent in the third quarter. So-called core prices rose just 0.9 percent, the smallest gain in two years.
Consumer spending, which accounts for more than two-thirds of economic activity, rose at a 2.2 percent rate, accelerating from the prior quarter's 1.6 percent growth pace, while business investment rebounded after its first drop in 1-1/2 years.
The housing market was another positive.
Homebuilding grew at a 15.3 percent rate after notching a 13.5 percent growth pace in the third quarter. It added to growth last year for the first time since 2005.
"A turnaround in the housing market will be a key support to the economy this year, with homebuilding contributing to growth and higher home prices supporting consumer spending," said Stuart Hoffman, chief economist at PNC Financial in Pittsburgh.