The U.S. Commerce Department upwardly revised its annualized GDP growth estimate for the third quarter of 2014 to 5% from the 3.9% figure reported last month, on the strength of higher consumer spending and business investment, making it the fastest growth witnessed since the third quarter of 2003.

The U.S. economy had expanded by 4.6% in the second quarter of the year.

In a report from Brian Turner, president and managing director of Meridian Alliance LLC, the 3.2% growth in real personal consumption expenditures in the third quarter (up from an 2.5% increase in the second quarter) represents a key piece of data regarding loan demand in the financial services industry, including credit unions.

But while the overall numbers from the third quarter are encouraging, Turner cautioned, there are some questions about the sustainability of recent growth rates going forward.

Indeed, on an annualized basis, economic growth in 2014 is running at a 2.5% clip, only 0.2 percentage points higher than the average growth rate over the past two years.

"Consumer spending continues to expand at a moderate 2.3% this year, about 0.01% below 2013 performance and only 0.02% higher than the previous two-year average," Turner said in a statement.

He indicated that one significant item that did "increase measurably" was government spending, which reversed course — jumping by 1.8% in 2014, after declining 1.4% in 2012 and falling 2.0% in 2013.

"In fact, the biggest contributor to the 5.0% [GDP] growth in the third quarter was a 4.4% increase in government spending, bolstered by a big jump in defense expenditures," Turner pointed out.

Moreover, the US GDP increased at an average pace of 1.3% for the first half of this year, on the heels of a 2.2% expansion for calendar 2013.

"Therefore, as eager as everyone might be to celebrate prosperity, we need to wait a bit to see if anything sticks," Turner advised. "Employment growth continues to be questionable and wage growth remains relatively stagnant."

Based in Plano, Texas, Meridian is an independent firm that provides strategic assessment and counsel to credit unions.

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