## Figure 1.4. Assessments of U.S. Equity Valuations

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**Canonical URL:** [Figure 1.4. Assessments of U.S. Equity Valuations](https://www.imf.org/-/media/files/publications/gfsr/2017/april/chapter-1/figure1-4.pdf)

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### 1. Policy Uncertainty and Implied Equity Volatility
- Global economic policy uncertainty (index, left scale).
- VIX (percentage points, right scale).
- Despite greater policy uncertainty, implied volatility has declined to multiyear lows ...

### 2. S&P 500 Index and Price-to-Earnings Ratio
- Twelve-month-forward P/E.
- Twelve-month-forward EPS.
- Price.
- S&P 500 Index.
- ... while U.S. equity valuations have become increasingly overvalued.
- Shiller price-to-earnings ratio (multiples, left scale).
- S&P 500 (index, right scale).
- Historical average plus one standard deviation since 1921.

### 3. Performance of U.S. Equity Industry Subsectors (Percent change since U.S. election)
- Deregulation (+28%).
- Infrastructure spending (+26%).
- Equipment (+48%).
- Banks (+38%).
- Tech hardware (+32%).
- Semiconductors (+19%).
- Consumer finance (+20%).
- Engineering (+21%).
- Health care (+18%).
- Capital goods (+11%).
- Autos and trucking (+12%).
- Materials (+13%).
- Internet services (+13%).
- Consumable fuels (+11%).
- Pharmaceuticals (+10%).
- Oil exploration (+13%).
- Logistics (+12%).
- Retail (+9%).
- Auto parts (+9%).
- Some sectors have benefited disproportionately from the interplay of potential policies ...

### 4. Valuation of U.S. Equities Exposed to Policy Shifts (Percent change since U.S. election)
- Corporate tax cuts  (+13%) or repatriation (+14%).
- Corporate tax cuts = companies with high effective tax rates and domestic revenue exposures.
- Repatriation = companies with the largest total cash balances held by foreign subsidiaries.
- Adverse trade policies (+21%).
- Adverse trade policies = trade-linked importers, outsourcers, and logistics firms.
- Infrastructure spending = firms that generate a significant portion of revenue from civil construction activities and revenue from within the United States.
- Deregulation = companies in sectors likely to experience regulatory relief, such as oil and gas, banks, consumer finance, and autos and trucking.
- ... while expectations—not actual earnings—are driving valuations in sectors that would benefit from stimulus.

*Sources: Bloomberg L.P.; Haver Analytics; JPMorgan Chase & Co.; and IMF staff estimates.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2017/april/chapter-1/figure1-4.pdf_