Washington ? The economy slipped in the fourth quarter of last year as consumers — nervous about a war with Iraq and their own job prospects and stock portfolios — turned cautious and increased their spending by the smallest amount in nearly a decade.

Gross domestic product rose at an annual rate of just 0.7 percent in the fourth quarter, a dramatic slowdown from the previous quarter’s solid 4 percent growth rate and ending 2002 on a sour note, the Commerce Department reported Thursday.

GDP measures the total value of goods and services produced within the United States and is considered the broadest barometer of the economy’s health.

“One quarter we’re soaring, the next we’re flat on our back. That was the story of 2002,” said Joel Naroff, president of Naroff Economic Advisors.

The performance — weaker than analysts were predicting — gave the fourth quarter the distinction of being the worst quarter for GDP in 2002. It also marked the weakest showing since the economy actually shrank at a 0.3 percent rate in the third quarter of 2001 as the country was mired in its first recession in a decade.

While the report highlighted the economy’s struggles to get back on sure footing, economists didn’t view the tepid fourth-quarter performance as a sign that the economy was going to backslide into recession.

In fact, analysts believe the economy is picking up momentum in the current quarter, expanding at a rate of 2.5 percent to 3 percent.

For all of 2002, the economy grew by a decent 2.4 percent, a big improvement over the tiny 0.3 percent rise registered in 2001, but still considered weaker-than-normal growth for the U.S. economy.