Corporate America’s fear of a threatening economic recession has evaporated as quickly as they appeared early this year.
The number of S&P 500 companies mentioning the word “recession” during their earnings in the 2nd quarter fell sharply to only 16, down sharply from 124 in the first quarter, according to the Data Source Factset. A recession is defined as two consecutive quarters of negative economic growth, measured by gross domestic product.
“Recession was pronounced only 16 times so far on earnings call in this quarter (4%)down from 124 in 1st quarter and 10-year-old average of 61. After Q4 ’24, it was the smallest of any quarter since Q4 ’21, “said Neil Sethi, CEO of Sethi Associates, at X and quoted the fact.
The fall is coming as some observers fear that President Donald Trump’s trading barifs are beginning to influence the economy.
Business leaders may operate under the assumption that the increased tariffs will eventually be “watered down” through negotiations instead of remaining a long -term financial burden.
Trump recently revealed sweeping tariffs beyond those announced in April in a step aimed at triggering a production boom. This has lifted the average US tariff rate to 20.1%, the highest sustained level since the 1910s, according to estimates released by the World Trade Organization and the International Monetary Fund.
Markets have also largely have previously induced recession fear, with the S&P 500 rising 28% since the beginning of the April dipping. Bitcoin, the leading cryptocurrency with market value, has risen to $ 122,000 from approx. $ 75,000, an increase of 62% in four months, Coindesk data shows.
According to JPMorgan, dealers have focused on resilient business earnings and the expected financial recovery following the preliminary slowdown.
More than 80% of the S&P 500 companies have recently reported their earnings in 2nd quarter, with over 80% to beat earnings expectations and 79% surpassed income forecasts. It is the strongest performance in four years.
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