Also called gross domestic product
GDP
Everything produced inside a country's borders. Its long-run growth rate is the ceiling on what any company can sustainably grow at forever.
Updated 2026-09-05
Gross domestic product is the total value of everything produced within a country's borders. Its growth rate is the single broadest measure of whether an economy is expanding.
It sets a hard ceiling that matters directly to a DCF. No company can grow faster than the economy forever, because it would eventually become the entire economy. That is the constraint behind perpetual growth, and it is why a perpetual growth rate above about 3 percent is not a bullish assumption but an incoherent one.
See also
- Perpetual growth — The rate the company is assumed to grow at forever, once the explicit horizon ends. It feeds the Gordon-growth terminal value and cannot sensibly exceed the economy's long-run growth.
- Business cycle — The repeating pattern of expansion, peak, contraction and trough. It is why a cyclical company's best year is a poor guide to its future.
- Inflation — The rate at which money loses purchasing power. It raises interest rates, which raises discount rates, which lowers every valuation at once.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
