It does not seem likely, however, even should all of the appropriate accounting adjustments to earnings be made, that such adjustments can be the central explanation of the extraordinary increase in stock prices over the past five years. However we calculate profits and capital, shifts in the stock market value of firms will doubtless continue to remain important influences on our economies.
Across many indicators, including GDP, the outcomes have been better than our central forecasts and often better than our upside scenarios as well. As an illustration, in August our central forecast was that the unemployment rate would end 2020 at close to 10 per cent and still be above 7 per cent at the end of 2022 (Graph 1).