Accounting earnings and gross domestic product
Yaniv Konchitchki, Panos N. Patatoukas
Journal of Accounting and Economics · 2014 · Volume 57 · Issue 1
DOI: 10.1016/j.jacceco.2013.10.001
Abstract
We document that aggregate accounting earnings growth is an incrementally significant leading indicator of growth in nominal Gross Domestic Product (GDP). Professional macro forecasters, however, do not fully incorporate the predictive content embedded in publicly available accounting earnings data. As a result, future nominal GDP growth forecast errors are predictable based on accounting earnings data that are available to professional macro forecasters in real time.
Keywords
Gross Domestic Product (GDP), Accounting earnings, Corporate profits
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