Given that the stock market represents primarily expectations of future economic activity and GDP is a measure of most recent economic activity, the ratio of these two data series represents expected future growth relative to current performance. This is similar in nature to how we think about the PE ratio of a particular stock. It stands to reason that this ratio would remain relatively stable over time and increase slowly as technology allows for the same labor and capital to be used ever more efficiently.
Libraries utilized:
• Matplotlib • Pandas • Pandas_datareader • Datetime • Plotly • Plotly Express