Fears of an impending recession among American corporations are fading faster than expected. While early in the year corporate leaders expressed significant caution, sentiment has since shifted sharply – despite the United States facing its highest average tariff rate since 1910.
According to FactSet data, only 16 companies in the S&P 500 mentioned the word “recession” during their Q2 earnings calls. This is a dramatic drop from 124 mentions in Q1 and well below the 10-year average of 61. As Neil Sethi of Sethi Associates pointed out, the term was used less frequently only in Q4 2024, and before that, not since late 2021.
📉 Record Tariffs, But Markets Stay Calm
This wave of optimism comes as President Donald Trump imposed a new round of trade tariffs, raising the U.S. average rate to 20.1% – the highest sustained level since the early 20th century. The official goal is to boost domestic manufacturing, though some analysts warn of a potential drag on the economy.
However, many executives appear to be betting that these tariffs will not remain in place long-term and could be softened in future trade negotiations.
📈 Stocks and Bitcoin Rally
Financial markets have so far reacted positively. The S&P 500 has risen 28% from its April low, while Bitcoin has surged from $75,000 to $122,000 – a 62% gain in just four months.
According to JPMorgan, investors are focusing on resilient corporate earnings and the prospect of economic recovery after a brief slowdown.
💼 Record-Breaking Earnings Season
Over 80% of S&P 500 companies have reported Q2 results, with more than 80% beating earnings expectations. Additionally, 79% exceeded revenue forecasts – marking the best performance in four years.
Economic data and corporate results suggest that, despite tariffs, political turbulence, and global uncertainty, the U.S. economy remains firmly on course. 🚀
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