Profits cycle Corporate profits tend to grow in line with nominal GDP. However, the relationship between the growth rates of profits and nominal GDP is not the same across all period. During some periods, such as the late 1990s and early 2000s, the stock market experiences a bubble which causes profits increase more than GDP. During some periods, such as 1972–1981 when the US economy experiences a persistent inflation, nominal GDP growth was higher than profits growth.
Equities and the business cycle
Equities and the business cycle
Equities and the business cycle
Profits cycle Corporate profits tend to grow in line with nominal GDP. However, the relationship between the growth rates of profits and nominal GDP is not the same across all period. During some periods, such as the late 1990s and early 2000s, the stock market experiences a bubble which causes profits increase more than GDP. During some periods, such as 1972–1981 when the US economy experiences a persistent inflation, nominal GDP growth was higher than profits growth.