We're going to ask a question today that has many answers. But before we ask it, consider the following chart, which shows the sales (or revenues) per share of the firms that make up the S&P 500 index for each quarter from 2000-Q1 through a preliminary estimate for 2016-Q3.
Here are some things to consider about the information shown in the chart:
- The post-recession revenue (sales) per share trends shown are both linear and parallel to each other.
- Share buybacks by S&P 500 firms since 2009 have reduced the number of outstanding shares over time, which would tend to boost the sales per share figure indicated in the chart above so that it is progressively higher than it would otherwise be if the number of shares for the S&P 500 were held constant.
Now for the question: What changed after 2012 to cause the outcome of stalled-out growth for the sales per share of the firms of the S&P 500?
Standard & Poor. S&P 500 Index Earnings. [Excel Spreadsheet]. Accessed 28 November 2016.
National Bureau of Economic Research. U.S. Business Cycle Expansions and Contractions. [Online Document]. Accessed 28 November 2016.