The following is an excerpt from our November 9, 2022 Morning Briefing.

Industry analysts have yet to get the recession memo. They are still estimating that S&P 500 revenues are growing. However, they’ve been reading the memo about the squeeze on profit margins from rising costs. As a result, many of them have been reducing their estimates for the profit margins of the S&P 500 companies they cover, as we can tell by deriving margin estimates from their revenues and earnings estimates. Let’s update the data we’ve been following to keep track of these developments:

(1) Forward revenues. The weekly forward revenues per share of the S&P 500 dipped recently but remains on an upward trend through the last week of October (Fig. 7). This weekly series is a very good coincident indicator of actual S&P 500 quarterly revenues per share, so we use it to track the latter. There’s no recession in the weekly series so far, which has been boosted by inflation, of course. It is up 10.7% y/y.

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