What are equity prices telling us about GDP?

Euro-zone equity prices have risen so far in Q3, painting a more optimistic picture of the economy’s performance than the consumer and business surveys. However, there are two reasons why we think that the surveys, which suggest that growth might have slowed slightly, are more reliable. First, they have a closer historical relationship with GDP. And second, the rise in equity prices has been led by financials, which is likely to reflect policy support for banks rather than stronger economic growth.