Re:U.S. economy shrank at a 1.4% annual rate in the first qu...
by paulpauper on Thursday April 28, 2022 @12:03PM
(#31194219)
agree. GDP does not mean stock market gains. In fact, you can have strong shareholder returns even if the economy is not growing at all. If $1 billion company generates $100 million in net profit annually, this is $ that must go to shareholders regardless of GDP. This is the situation right now with the US...major companies are generating huge profits annually even if real GDP, productivity, and population growth is sluggish, which is why the stock market has done so well in spite of so many things seeming to be wrong..
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Re:U.S. economy shrank at a 1.4% annual rate in the first qu...
by slv77 on Friday April 29, 2022 @08:13AM
(#31204150)
Long term corporate profit growth overall can’t exceed demographic growth + productivity growth unless you assume that corporate profits will eventually consume all of GDP with labor and taxes going to zero.
A large amount of corporate profit growth since the 80s has been due to a declining share of labor compensation vs capital and declining effective tax rates. Productivity gains are the only real “free lunch” which is what capital investment is supposed to provide to justify the gains. Productivity growth has been stagnating for a couple of decades.