Are Fewer S&P 500 Companies Concerned About a Recession?

Given the continuing concern in the market about a possible economic slowdown or recession, did more S&P 500 companies than normal comment on recession during their earnings conference calls for the fourth quarter?

The answer is yes. FactSet Document Search (which allows users to search for key words or phrases across multiple document types) was used to answer this question. Through Document Search, FactSet searched for the term “recession” in the conference call transcripts of all the S&P 500 companies that conducted earnings conference calls from December 15 through March 10.

Of these companies, 148 cited the term “recession” during their earnings calls for the fourth quarter. This number is well above the 5-year average of 71 and well above the 10-year average of 57.

At the sector level, the Financials (38) and Industrials (24) sectors have the highest number of S&P 500 companies citing “recession” on Q4 earnings calls, while the Financials (61%) and Real Estate (47%) sectors have the highest percentages of companies citing “recession” on Q4 earnings calls.

However, it should be noted that after peaking in the second quarter, the number of S&P 500 companies citing “recession” on earnings calls has declined for the second straight quarter. The number of S&P 500 companies citing “recession” on earnings calls for Q4 2022 is 20% below the number in Q3 2022 (185) and 39% below the number in Q2 2022 (241).

Despite the decrease in the number of S&P 500 companies citing “recession” on Q4 earnings calls, estimated earnings declines for Q1 2023 (to -6.1% from -0.4%) and Q2 2023 (to -3.9% from -0.6%) have increased since December 31.

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