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The coming long-run slowdown in corporate profit growth and stock returns

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Abstract

Over the past two decades, the corporate profits of stock market listed firms have been substantially boosted by declining interest rate expenses and lower corporate tax rates. This note's key finding is that the reduction in interest and tax expenses is responsible for a full one-third of all profit growth for S&P 500 nonfinancial firms over the prior two-decade period.

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  • Michael Smolyansky, 2022. "The coming long-run slowdown in corporate profit growth and stock returns," FEDS Notes 2022-09-06, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfn:2022-09-06
    DOI: 10.17016/2380-7172.3167
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    File URL: https://www.federalreserve.gov//econres/notes/feds-notes/the-coming-long-run-slowdown-in-corporate-profit-growth-and-stock-returns-20220906.html
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    Cited by:

    1. Michael Smolyansky, 2023. "End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns," Finance and Economics Discussion Series 2023-041, Board of Governors of the Federal Reserve System (U.S.).
    2. Michael Smolyansky, 2023. "End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns," Finance and Economics Discussion Series 2023-041, Board of Governors of the Federal Reserve System (U.S.).

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