Surprise Increase in GDP
US GDP saw an unexpected increase in the third quarter, turning around this year's downward GDP trends. While the news may seem like a positive sign for the future, economists are still pessimistic about the possibility of a coming recession.
GDP rose 0.6% this quarter, a 2.6% annual growth rate. And while overall the economy grew and services spending increased, there was a decrease in goods spending for this quarter - goods which have been the primary driver of inflation. This is in part why economists don’t believe the picture of the economy this news paints is as great as it may seem. Inflation is eating away at Americans' savings, and it also means that people are borrowing more money.
According to the Federal Reserve Bank of New York, there is now $887 billion owed in credit card debt as of last June. This represents a strong increase in spending on credit as many Americans are finding it more difficult to pay their monthly bills. Another report from creditcards.com shows that there has been a 10% year over year increase in people holding credit debts for more than 12 months. If debts continue rising to unsustainable levels, it could mean that more people default on their debt and are unable to keep up with spending, which would have drastic impacts on the economy as a whole.
Overall, the future still remains uncertain in regards to what will happen to the economy going forward, even with GDP growth coming back.