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August 13, 2010 United States: Portfolio StrategyGoldman Sachs Global Economics, Commodities and Strategy Research 3
The charts we are watching: Strategies for a weak GDP growth environment
Exhibit 1: 2011 US GDP forecasts
as of August 12, 2010
 Exhibit 2: Sensitivity of 2011 EPS to sales growth and margins
as of August 12, 2010
 
Source: Blue Chip Economic Indicators and GS Global ECS Research.
 
Source: Compustat, First Call, I/B/E/S, and Goldman Sachs Global ECS Research.
Exhibit 3: Degree of Operating Leverage (DOL) rises as revenues decline
Source: Compustat and Goldman Sachs Global ECS Research.
012345671.82.32.83.33.8
   N  u  m   b  e  r  o   f   F  o  r  e  c  a  s   t  s
2011 GDP Growth (%)
2011 US GDP Forecastsn=51
GoldmanSachs1.9%Consensus2.8%
Top-downBottom-UpGS ForecastConsensus2010E2011E2010E2011E
S&P 500 ex-Financials and UtilitiesSales$780$819$785$838Profit Margin8.2%8.4%8.4%9.0%EPS$64$69$66$75Utilities EPS$3$4$3$3Financials EPS14171417
S&P 500 EPS$81$89$83$96
1234(15)(10)(5)05101520253035
     1     9     7     8     1     9     8     0     1     9     8     2     1     9     8     4     1     9     8     6     1     9     8     8     1     9     9     0     1     9     9     2     1     9     9     4     1     9     9     6     1     9     9     8     2     0     0     0     2     0     0     2     2     0     0     4     2     0     0     6     2     0     0     8     2     0     1     0     2     0     1     2     2     0     1     4
D e gr  e e of   O p er  a t  i  n gL  ev er  a g e (   ex-F i  n an ci   al   s an d  U t  i  l  i   t  i   e s )  
   R  e  v  e  n  u  e   G  r  o  w   t   h   (  e  x  -   F   i  n  a  n  c   i  a   l  s  a  n   d   U   t   i   l   i   t   i  e  s   )
Revenues DecliningOperating leverage decliningRevenues GrowingOperating leverage increasingRevenueGrowthDegree of OperatingLeverageGoldmanSachs
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