Companies’ Recession Talk at Lowest Level Since 2018: FactSet

Meanwhile, executives continue to express concern about the Trump administration’s tariff policies.

Employee Leonora Miramontes stocks shelfs at a Target store in Chicago on Nov. 26, 2024. Kamil Krzaczynski/AFP via Getty Images

Tariff-fueled downturn fears have traveled through Wall Street, but companies are neither listening to nor participating in the recession talk.

“Given concerns in the market about inflation and tariffs, have more S&P 500 companies than normal commented on recession during their earnings conference calls for the fourth quarter?” said John Butters, a senior earnings analyst at FactSet, in a March 10 note.

“The answer is no.”

The word “recession” appeared only 13 times in S&P 500 companies’ fourth-quarter earnings calls between Dec. 15 to March 6, Butters said.

This quarter marked the lowest number of businesses calling out a recession during earnings calls since the first quarter of 2018. In addition, the number is below the five-year average of 80 and the 10-year average of 60.

Industrial and materials sectors accounted for 54 percent of the companies citing recession.

While companies have refrained from uttering the R-word in front of shareholders and analysts, several surveys have indicated mixed outlooks among executives.

What Executives Are Saying

According to business magazine Chief Executive’s latest CEO Confidence Index, which was conducted on March 4–5 with more than 220 respondents, U.S. CEO confidence is at its lowest level since November 2012.

The CEOs’ ratings of current business conditions declined sharply from January. Thirty-nine percent of respondents think the business climate will improve this year, down from 52 percent at the start of the year.

Don Ochsenreiter, president and CEO of Dollamur Sport Surfaces, said President Donald Trump has been “off to a great start.” However, the president’s tariff policies have been “disappointing” and “muddying the waters of where the U.S. and world economies are headed,” Ochsenreiter said.

Trump’s on-again-off-again trade policies have started weighing on Mitchell Metal Products’ operations, said the company’s CEO, Tim Zimmerman.

“We are now seeing weakening demand from our customer base and increases in the cost of metals, which is our major raw material,” said Zimmerman in the report. “Weakening demand and increasing costs place our manufacturing company in a precarious economic situation. We expect a rough road ahead.”

A separate survey of CEOs suggested improved confidence in the first quarter of 2025.

The Conference Board’s Measure of CEO Confidence report, fielded from Jan. 27–Feb. 10, was at its highest level in three years.

“All components of the Measure improved, as CEOs were substantially more optimistic about current economic conditions as well as about future economic conditions—both overall and in their own industries,” said Stephanie Guichard, a senior economist of global indicators at The Conference Board.

CEOs at some of the largest U.S. corporations have warned that tariffs could raise prices.

Target CEO Brian Cornell, for example, recently told CNBC that shoppers will “likely see price increases” amid tariffs on Mexican products entering the United States.

Further, last week, Best Buy CEO Corie Barry said during an earnings call that she expects consumers will be hit with price increases.

Shoppers cast shadows as they carry their bags along the waterfront in Portland, Maine, on Dec. 26, 2024. Kevin Lamarque/Reuters

“China and Mexico remain the number-one and -two sources for products we sell, respectively,” Barry stated. “While Best Buy only directly imports 2 percent to 3 percent of our overall assortment, we expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely.”

Despite growing fears that businesses will pass tariff-related costs onto customers, one survey suggests that it might be easier said than done.

The Federal Reserve’s latest Beige Book—a summary of economic conditions across the central bank’s 12 districts—revealed that firms expressed difficulty passing higher costs onto clients. Although businesses are generally optimistic, the report’s contacts shared their concern about intensifying economic uncertainty.

Examining the Recession Talk

Financial markets have endured sharp selloffs this month, with investors fearing back-to-back quarters of negative GDP growth.

Goldman Sachs raised its 12-month recession probability from 15 percent to 20 percent.

David Mericle, the chief U.S. economist at Goldman Sachs, says the odds could be higher if he and his colleagues believe tariffs will be larger than expected.

“In general, I think one gets the impression that the White House is willing to pursue policies that might imply more economic and political risk than it was willing to in its first term,” Mericle said in a March 10 “Goldman Sachs Exchanges” podcast.

According to Apollo chief economist Torsten Slok, recession odds over the next 12 months have increased in the United States, the United Kingdom, and Europe.

The United States may suffer a contraction in the first three months of 2025. Still, the world’s largest economy could escape a recession, says Paul Ashworth, the chief North American economist at Capital Economics.

“Although our forecast for first-quarter GDP growth is now down to -1.9 percent annualized, we still believe that, on balance, the U.S. economy will escape recession and rebound in the second quarter, as the distortion caused by the unseasonably severe winter weather and the pre-tariff- surge in imports are both reversed,” Ashworth said in a March 6 note.

Ultimately, uncertainty surrounding the new administration’s tariff policies can make it harder to determine the economic outlook or even for the financial markets to stage a comeback, according to Adam Turnquist, the chief technical strategist at LPL Financial.

“A key factor behind the recent market selloff is the uncertainty surrounding trade tariffs and their economic implications,” Turnquist said in a note emailed to The Epoch Times.

“The lack of clarity regarding tariff policies has made it difficult for markets to stage a meaningful recovery, as investors hesitate to make significant moves without a clearer outlook.”