Economics Alum Discusses Benchmarking Company Growth to GDP

“There are two main reasons why gross domestic product might not be a good benchmark for your company’s volume growth,” writes alum Robert Fry in a column on “Economic Outlook | Growing with GDP … or Not.”

Robert Fry

Fry earned a bachelor’s degree in Economics from Ohio University’s Honors Tutorial College.

A company might assume, as a first approximation, that demand for its products (and sales volume if market share is stable) grows with real GDP. However, for most companies, other economic indicators are much better gauges of volume growth than is real GDP….

There are two main reasons why real GDP might not be a good benchmark for an individual company’s volume growth. First, some parts of the economy are more cyclical than the economy as a whole….

Second, few companies serve the entire economy. While there are exceptions, most companies sell either goods or services. For a materials supplier, growth in the service sector isn’t very relevant. What matters is growth in the goods-producing sectors of the economy: agriculture, construction, manufacturing, and mining. Unfortunately for US manufacturers, these sectors grow less rapidly than GDP over time.

Read Fry’s entire column.

About Robert Fry: Robert Fry is chief economist of Robert Fry Economics LLC, where he analyzes the global economy to help decision-makers at manufacturing companies and wealth management firms. He publishes the Current Economic Conditions newsletter and is a regular guest on the “Money & Politics in Delaware” radio show. Until retiring in June 2015, Fry was senior economist at DuPont. While there, Robert and his colleague, Bob Shrouds, were named among the top economic forecasters by Bloomberg, USA Today, and the Wall Street Journal. In 2005, they won the prestigious Lawrence R. Klein Award for Blue Chip Forecasting Accuracy. While at DuPont, Fry gave more than 800 speeches on the economy to DuPont management, business teams, customers, and trade associations. He received his bachelor’s degree in Economics from Ohio University and his master’s degree and Ph.D. in Economics from Harvard University. To receive Current Economic Conditions every month or to book Fry to speak, contact him at robertfryeconomics@gmail.com.