The business cycle differs from the economic cycle in that GDP growth is much more persistent than EPS growth.
EPS declines can happen even when the economy is growing.
Despite positive economic growth in the 68 years since 1950, earnings have fallen in 23 of those years… 34% of the time!
In the 2000s and 2010s, real GDP growth (excluding inflation) has lagged behind the historical 3 percent average.
Even if the economy appears to be stable in the coming years, history shows that EPS is susceptible to decline, particularly given the current high profit margins.