over 1 year ago • 1 min
It might feel like every quarter is blurring into one at the moment, but the economic challenges that US companies were facing a few months ago are starting to recede – even if only slightly. You can see that in the chart above, which shows the number of S&P 500 companies that mentioned certain profit-damaging factors in their latest earnings updates (in red) compared to the quarter before (in gray).
Now, it’s true that we’re still early in earnings season, and that this is only a small subset of companies. But there’s at least one slightly promising sign here: firms seem a little less focused on rising prices, making fewer mentions of inflation-related categories like labor, transport, raw material, and commodity costs, as well as oil and gas prices. That’s despite data out on Wednesday showing US inflation hitting a new 41-year high.
Of course, some challenges are becoming more of a problem. The Ukrainian war is causing shortages of goods usually exported by the country, like sunflower seeds. The US dollar has risen in value as investors have clamored for the safe haven currency, which has reduced the value of American companies’ earnings abroad. And finally, China has been standing by a zero-Covid policy that disrupted global supply chains last quarter, and could do the same all over again.
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