by Scott Krisiloff, Avondale Asset Management
Last week marked the 6th anniversary of the S&P 500′s previous cycle peak. Given the general pessimism over those six years, it may not feel like there’s been much growth, but the economy has indeed grown, and below are some numbers to help visualize by how much.
The S&P 500 is up 10% since October of 2007. Since that time the population of the US has grown by 4%, or 13m people. That’s more people than currently reside in New York and Los Angeles (cities proper) combined. Over the same time frame, the global population has grown by 7%, or 469 million people. That’s more people than the current population of all but two countries.
An average item that cost $100 in 2007 costs $112 today, meaning that the 10% rise in the S&P hasn’t kept pace with even weak inflation. Partially driven by this inflation, US nominal GDP has risen by 16%, or ~$2.2 Trillion per year. That’s an extra $5,000 per capita. By contrast, global GDP has increased by 28% in the five years ending in 2012 (most recent data). That’s an extra $15 Trillion, nearly equivalent to US GDP.
Tapping into this global growth, the revenue and operating income of non-financial S&P 500 constituents has grown by 23-24%, meaning that revenue has grown by $1.4 Trillion and EBIT has grown by $200 B, as much as the total EBIT generated by the top six S&P constituents.
It’s worth noting that all of this growth happened in historically weak environment. The last six years has been the slowest six year growth period for US GDP since 1936. Still, there has been growth, and quite a bit of it.
Sources: Various
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