Depends on perspective. I've looked at the last 20 years of S&P 500 earnings (gathered from the S&P website) and GDP growth info from the Economics and Statistics Administration. I don't see a defined correlation. That is earnings can grow more than 30% in a low growth economic environment. That doesn't mean it will happen.
The fallacy in this Morningstar post is that because investment analysts expect 30% earnings growth and 1Q results were good (until you parse out financials) that economists forecasting GDP must be wrong and therefore will have to revise their forecasts up. I disagree - I think it's more likely that economists are spot-on and analysts are incorrect and will be reducing earnings growth expectations as the year wears on.
Where does substantial growth come from with tight credit, nominal CAPEX spending and high unemployment?
