This article makes the point that an analysis of GNP probabilities—from the cyclical investor’s viewpoint—must be more demanding than the usual forecasts offered. It must focus on the fluctuations in the GNP “Rate of Change.”

A central piece of evidence supporting this study’s conclusions is the amazingly close parallel demonstrated between the GNP rate of change and the profit margin. The study explains this as reflecting varying intensity of competition induced by fluctuations in the GNP rate of change. Cyclical stock price movements, through the effect on E/S, are vitally affected.

The article does not extend to the technique of forecasting GNP, except to suggest that elements examined by the analyst also be considered on a “Rate of Change” basis so as to make the comparisons valid and the conclusions useful to investors interested in cyclical fluctuations.