{"id":159,"date":"2025-04-09T23:30:52","date_gmt":"2025-04-09T23:30:52","guid":{"rendered":"https:\/\/karolpelc.com\/notes\/?p=159"},"modified":"2025-04-09T23:30:52","modified_gmt":"2025-04-09T23:30:52","slug":"economic-growth-%e2%89%a0-equity-gains","status":"publish","type":"post","link":"https:\/\/karolpelc.com\/notes\/2025\/04\/09\/economic-growth-%e2%89%a0-equity-gains\/","title":{"rendered":"Economic Growth \u2260 Equity Gains"},"content":{"rendered":"\n<p class=\"\">Economic growth must exceed expectations to generate abnormal stock returns, something increasingly difficult when starting expectations are already high. As a result, the relationship between GDP growth and stock market returns tends to be weak or even negative, despite widespread belief in a strong positive link.<\/p>\n\n\n\n<p class=\"\">This disconnect arises because markets are forward-looking while GDP is backward-looking, and stock indices often represent only a narrow slice of the economy. When investors extrapolate recent trends, valuations can overshoot, leading to disappointment even during solid growth.<\/p>\n\n\n\n<p class=\"\">Moreover, as more companies chase high growth, more players share profits. Rising competition, equity issuance, and overinvestment dilute earnings-per-share, reducing actual shareholder gains. Ultimately, it\u2019s not growth that drives returns, but growth that is capital-efficient and above expectations.<\/p>\n\n\n\n<p class=\"\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Economic growth must exceed expectations to generate abnormal stock returns, something increasingly difficult when starting expectations are already high. As a result, the relationship between GDP growth and stock market returns tends to be weak or even negative, despite widespread belief in a strong positive link. This disconnect arises because markets are forward-looking while GDP [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[28,16],"tags":[69,60,68,70,13,5],"class_list":["post-159","post","type-post","status-publish","format-standard","hentry","category-economic-growth","category-markets","tag-correlation","tag-economic-growth","tag-equity-returns","tag-macro","tag-markets","tag-price-drivers"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/posts\/159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/comments?post=159"}],"version-history":[{"count":1,"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/posts\/159\/revisions"}],"predecessor-version":[{"id":160,"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/posts\/159\/revisions\/160"}],"wp:attachment":[{"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/media?parent=159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/categories?post=159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/karolpelc.com\/notes\/wp-json\/wp\/v2\/tags?post=159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}