Growth Spurt Underway
For the first time in more than a decade, we expect acceleration in nominal GDP growth to 5%. While the media tends to reference real GDP, nominal GDP reflects the impact of inflation. Corporate revenues are defined in nominal terms and with profit margins running high, revenue growth will be a key driver of future earnings.

  • ​​We expect nominal GDP growth to accelerate in 2018, potentially reaching 5% and marking two consecutive years of increased growth.

  • Several catalysts are at play, including a potential rise in inflation and the positive effects of the recently passed tax reform. We believe the law’s sweeping changes could contribute nearly 50 bps to GDP growth.

  • Certainty about tax reform has contributed to high levels of business optimism, which may be an additional catalyst to spur business spending. Business spending such as capital expenditures and research and development investment are proven agents of GDP growth.

  • Banks and other lenders may benefit as businesses increase borrowing activity and possibly drive up interest rates as a result.

The views expressed are the views of Fred Alger Management, Inc. as of February ​2018. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

Risk Disclosures: Investing in the stock market involves gains and losses and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks, as the prices of growth stocks tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political and economic development.

Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 /

800.305.8547 (Retail) / 212.806.8869 (Institutional)​