Earnings Above Trend

As readers of our research know, we track four main inputs in our macro model. One of those inputs is “current earnings versus potential earnings.” When COVID shut the economy down, earnings versus potential fell off a cliff and bottomed out about 40% below potential. However with the earnings numbers released this quarter, our model shows that earnings are now 17% above potential.

This fact is a very important piece of information and we will be monitoring it very closely.

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