Executives’ ‘recession’ chatter hits lowest point since post-lockdown rebound year

Executives’ ‘recession’ chatter hits lowest point since post-lockdown rebound year

Earnings Watch: RH, Adobe, Broadcom, Oracle also report

After 2022’s inflation surge, many economists were convinced the nation was destined for a recession. Today, executives, at least, are not nearly as worried.

During the latest round of quarterly earnings calls, a FactSet analysis found, the number of S&P 500 companies that mentioned the word “recession” fell to its lowest number since the fourth quarter of 2021, a year when the zaniness of the economy’s reopening after the pandemic upended the job market and the world’s shipping infrastructure and led to massive corporate profit margins.

Twenty-nine of those companies uttered the word ”recession” during those recent calls, FactSet found. That’s well below averages for the past five and 10 years, according to the analysis.

“Recession” earnings-call chatter grew more frequent in 2022, after food costs spiked when Russia invaded Ukraine, raising concerns that price increases in grocery aisles and the Federal Reserve’s prescription for inflation overall — higher interest rates — might be too much for consumers to handle. But the topic has come up less on those calls ever since.

And the U.S. economy has continued to defy the pessimists. It added 272,000 new jobs in May, more than expected.

Meanwhile, the earnings schedule for the week ahead will be lighter. But it will offer a look at the state of the housing market and a look at artificial-intelligence demand outside the biggest technology companies.

The call to put on your calendar

RH and the housing market: The furniture industry’s recovery hinges largely on the state of the housing industry, where higher interest rates, mortgages and home prices have kept the market frozen. That recovery could be led by the wealthiest shoppers, who might be more likely to buy their Belgian flax-linen sofas and European white oak sideboards at luxury furniture retailer RH RH, -3.85%, which reports Thursday. The chain has called the current backdrop “the most challenging housing market in three decades.” Management in March forecast improving demand, but some analysts had their doubts. The latest results will test the retailer’s more upbeat outlook.

The numbers to watch

Adobe, Broadcom, Oracle sales: Cloud-software provider Oracle Corp., reports on Tuesday, while chipmaker Broadcom Inc. puts out results on Wednesday, followed by Adobe Inc. on Thursday. The results will arrive as Oracle ORCL, +1.96% and Broadcom AVGO, +0.38% try to keep up in the artificial intelligence arms race, and as analysts worry about increasing competition for Adobe ADBE, +1.59%.

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