U.S. economic growth slowed significantly below expectations in the last three months of 2007, and is on the verge of recession.

In the fourth quarter of 2007, the gross domestic product rose by 0.6 percent, down sharply from 4.9 percent in the previous quarter, according to the Commerce Department.

In 2007, the economy grew by 2.2 percent. Meanwhile, prices were up. The price index for the fourth quarter in the report rose by 2.6 percent, versus 1 percent in the previous quarter.

New home construction was down 24 percent in the same period. Meanwhile, consumer spending grew by 2 percent in the three month period.

A Reuters survey of analysts had expected a 1.2 percent growth rate for the fourth quarter.

U.S. money policy makers are expected to cut interest rates today to give a boost to the economy. Investors are betting that the Federal Open Market Committee – which is scheduled to make an announcement at 2:15 p.m. EST – will reduce rates by 0.5 percent, based on futures trading.