In another signal that the US economy is growing at a nice clip, third quarter GDP growth was revised upwards to 3.9%. The Commerce Department originally reported a growth rate of 3.7% for the quarter. The adjustment was due to higher exports and consumer spending than was originally estimated for the quarter.
While this good news is certainly welcome, there are some dark clouds on the horizon which will be examined more closely in a future post. Specifically, consumer, commercial, and federal debt are very high by historical standards, and interest rates are too low. Combined with our tremendous trade deficit, our current economic environment is unsustainable over the long term. We are already seeing the implications of our debt-laden society in the form of the weak dollar overseas, as the US Dollar recently set another record low vs. the Euro. Other possible adjustments include rising interest rates, inflation, and downward pressure on wages.