The recent ascent of stock prices: can it be explained by earnings growth or other fundamentals?

The U.S. economy has enjoyed a long, healthy expansion in the 1990s. Inflation has been contained, and there is little evidence of any imbalance to suggest that the end of the upturn is imminent. Earnings growth during this period has been extraordinary. If investors expect a small component of the...

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Bibliographic Details
Published in:Economic review (Cleveland) 1997-03, Vol.33 (2), p.2
Main Authors: Carlson, John B, Sargent, Kevin H
Format: Article
Language:English
Subjects:
Analysis
Bull markets
Corporations
Dividends
Earnings per share
Economic forecasting
Economic indicators
Financial analysis
Growth rate
Hypotheses
Investments
Price earnings ratio
Prices
Return on investment
Securities analysis
Securities markets
Securities prices
Stock exchanges
Stock prices
Trends
Valuation
World War II
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Summary:The U.S. economy has enjoyed a long, healthy expansion in the 1990s. Inflation has been contained, and there is little evidence of any imbalance to suggest that the end of the upturn is imminent. Earnings growth during this period has been extraordinary. If investors expect a small component of the recent surge in earnings to persist indefinitely, then stock prices would be higher than traditional valuation approaches indicate. The analysis presented here, however, suggests that earnings growth is not the whole story.
ISSN:0013-0281
2163-372X