Reading the tea leaves, it looks like corporate America is getting more worried about a recession. Analysis of S&P 500 2018 earnings transcripts from the fourth quarter shows fading exuberance among corporate executives, according to Gartner, Inc. “Mentions of the words ‘downturn’ and ‘slowdown’ were four times more likely to appear in earnings call in 4Q18,” they reported.
The most commonly cited economic concern was the slowing Chinese economy. This theme emerged strongly in the last quarter of 2018 and has picked up momentum in 2019 earnings calls. The companies most exposed to China were more likely to report demand weakness in 2018, or predict that it would be occurring in 2019.
But it should be noted that this is still a minority among American companies. Most executives remained optimistic about the U.S. economy in 2019. Sentiment was particularly positive in the technology and communications sectors.
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