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Inflation still has Corporate America concerned: stat of the day

Brian Sozzi
·Executive Editor
Updated ·2-min read

Inflation has become entrenched inside the brains of many corporate chieftains, despite Federal Reserve Chair Jerome Powell pumping a disinflation view earlier this month.

Among the S&P 500 companies that have reported earnings from Dec. 15 through Feb. 23, 325 have cited the term "inflation" on their earnings calls, according to fresh research from FactSet (see chart below). This number is above the five-year average of earnings call inflation mentions of 201, as well as the 10-year average of 157, FactSet says.

If there is any saving grace, it's that the number of S&P 500 companies calling out inflation on earnings calls thus far has dropped 20% quarter over quarter this reporting season.

"We saw high teens to 20% inflation in some quarters last year. We're now anticipating high single digits [percentage] this year," Hostess Brands (TWNK) CEO Andy Callahan told Yahoo Finance Live.

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Recent data has supported inflation's stickiness even in the face of a series of interest rate hikes from the Fed dating back to early 2022.

Inflation has not gone away as a key concern from inside Corporate America.
Inflation has not gone away as a key concern from inside Corporate America. (FactSet)

The core personal consumption expenditures index (PCE) — a closely watched inflation measure of the Fed — rose 4.7% from a year ago in January. Including food and energy prices, the PCE advanced 5.4% year over year.

Both measures were above Wall Street estimates and a quicker pace compared to December.

"The recent US [inflation] data probably makes us more confident of a hard landing given the boom-and-bust nature of this cycle that has been increasingly clear step-by-step over the last 2-3 years," warned Deutsche Bank strategist Jim Reid.

The results spooked broader equities markets on fears of a more firmer Fed, which could lead to a hard economic landing.

All three major indices lost about 3% last week, the worst weekly performance of 2023. The S&P 500 dropped for the first straight week, while the Dow Jones Industrial Average has shed value in four consecutive weeks.

“And from what I read, I know inflation has been a little bit pesky. But it does feel like that the Fed is going to sort of be done with what they need to do on interest rates, either in the summer or the springtime," Floor & Decor (FND) president Trevor Lang told analysts on a recent earnings call.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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