Equity valuation is not abnormally high in the United States and the euro zone, even if growth returns to the level of potential growth

Many investors are concerned about the rise in share prices in the United States and the euro zone at a time when the economies are at the end of an expansion period. But we do not believe US or European equity valuation is abnormally high, based on the following two arguments: The demand-stimulating policies will probably prevent growth from falling below potential growth (2.6 % per year in the United States, 1.2 % per year in the euro zone); If growth remains at the level of potential growth, equity valuation is not abnormally high at present given the outlook for long-term interest rates in the United States and the euro zone.