Once again, it’s time for our monthly update on risk factors that have proven to be good indicators of economic trouble ahead. As expected, the data hasn’t changed much from last month—it remains positive in almost all areas and has continued to improve in many cases—but it’s still important to keep an eye on things.

As we enter the month of December, the economic forecast remains encouraging.

We talked the other day about the power of compounding and how it can be used to help determine whether trends are sustainable. The idea is that the compounded returns will at some point run into a limit that can’t be surpassed.

It sounds simple, but the idea of limits actually isn’t so clear. In many cases, the real issue isn’t a physical limit, but an economic and technological one.

We interrupt this broadcast to bring you important news: the U.S. economy is still growing—and faster than many expected.

I hesitate to highlight this, as I fear I'm starting to come off as a perennial optimist, even a cheerleader, for the economy. But it’s important to consult the data, good and bad alike, and there have been plenty of positive developments lately. 

I wrote last week about trends that can’t continue and noted that I would be looking at more of them through December. First, though, it makes sense to consider exactly what it is that makes a trend unsustainable.

Why can’t something go on forever?

As the industry that led us to disaster in 2008, housing has had a long road back. You can make a good argument that, until the housing market returns to normal, the economy hasn’t really recovered. While not a defining indicator, a healthy housing market is a necessary condition for recovery.

I last looked at housing in June, so it’s time for an update. The news is actually quite good, despite some of the headlines recently. 

I have two reasons for writing a post on gratitude today: The first is that I have much to be grateful for (I plan to write a longer post about this next week as we approach Thanksgiving), and the second is that I have been in meetings all day and am too short on time to finish the housing market post I had planned. You’ll get that tomorrow.

“If something can’t go on forever, it will stop.” — Herb Stein

When you think about it, we really do live in an age of miracles. Less than 24 hours ago, I was in London, but I slept in my own bed last night and am back at work in Boston today. While in Europe, I kept in touch with my family via video-call and simply pulled out my credit card to pay for things. It was all astonishingly seamless.

For the past two days, I’ve been in London at a J.P. Morgan European investment summit, and a fascinating time it has been.

As investors, it's not so much the things we don't know that we need to be mindful of, but the things we don’t even know we don’t know. For Americans, how things really are in the rest of the world can easily fall into that category, so it’s been interesting to get some international perspective over the last couple of days.

Here are three of my key takeaways.

The big news today is that, after two consecutive quarters of declining growth, Japan has fallen into recession. The Japanese economy was down 1.6 percent in the third quarter, following a 7.3-percent decline the previous quarter.

Along with being aware of external problems, investors need to acknowledge one of the pending headwinds for the U.S. stock market: the potential for corporate profit margins to decline.

Today, I want to summarize a great analysis by Baijnath Ramraika and Prashant Trivedi, which suggests that margins can’t continue to climb.