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In Foreign Affairs online last month, we used our own implied earnings growth (IEG) estimates from stock prices around the world to evaluate President Trump’s impact on the U.S. market. We found that it was virtually nil until at least September 2017, when GOP congressional leaders announced their tax-reform initiative. Laying aside the question of the president’s role in the reform, U.S. IEG has outperformed its developed-market peers by 0.3 percent since then—as shown in the inset graphic above.

An important item of sharp recent debate is what effect the tax reform will have on U.S. GDP growth, which will determine—among other things—the extent of the additional debt burden. The Trump Treasury forecasts a 0.7 percent increase in GDP growth on average per year over the next decade, primarily as a result of corporate tax cuts. The Treasury analysis has been scathingly challenged by Jason Furman and Larry Summers, among others.

One way to estimate the tax reform’s growth effects is to look at the historical relationship between corporate earnings and GDP. From 1990-2015, U.S. corporate earnings grew with GDP at a ratio of almost 3:2, although after 2007 the ratio fell to 1:1. If either of these trends were to persist, our implied earnings growth estimate from stock prices suggests an average annual GDP growth boost of 0.20-0.30 percent, as shown in our main graphic. This estimate is slightly higher than that produced with a very different methodology by the Tax Foundation, although it is only about a third of what Treasury is forecasting. In short, even upbeat stock market investors appear to be projecting far less growth from tax reform than the Trump Administration.