Speaking of inflation

Facing higher costs for raw materials, labor, and logistics among other inputs, inflation has been a top-of-mind issue for corporate executives for the last two years. According to Factset, over the last ten years, on average inflation is mentioned by 163 S&P 500 index member quarterly earnings calls.  With 92% S&P 500 companies reporting 1Q23 earnings to date, inflation was mentioned on 278 earnings calls, down from a peak of 416 during the 2Q212 reporting season.  Notably, the occurrence of inflation mentions on earnings calls is very well synchronized with reported inflation given US inflation peaked in June 2022 at 8.9% and was 4.9% in April 2023.  However, with total S&P 500 earnings on pace to decline year on year for the second quarter in the row, fewer companies are converting declining costs into higher profits. 

Sources: Factset, US Department of Labor, May 2023