Through Dec 2023

chart: Nominal GDP and Earnings Per Share

GDP – Nominal & EPS

Nominal GDP and earnings per share (EPS) have a close and fundamental relationship.  Nominal GDP is driven by the economic cycle, with real GDP providing core growth and the inflation rate adding a degree of variability over time.  Earnings growth is driven by the business cycle, which revolves around the economic cycle with swings that have greater magnitude and frequency.  The primary driver for the core baseline of earnings over time is nominal economic growth (yet GDP does not consistently drive EPS in the short-run).