Corporate America’s Concerns About Recession Decline Even as Trump Raises Tariffs to Record Levels Since 1910

Corporate America’s fears of a looming economic recession have evaporated as quickly as they emerged early this year. The number of S&P 500 companies that mentioned the word “recession” during their second-quarter earnings calls dropped sharply to just 16, down from 124 in the first quarter, according to data from FactSet. A recession is defined as two consecutive quarters of negative economic growth, as measured by the gross domestic product.

“Recession was uttered just 16 times so far on earnings calls this quarter (4%), down from 124 in Q1 and the 10-year average of 61. After Q4 ’24, it was the least of any quarter since Q4 ’21,” said Neil Sethi, managing partner at Sethi Associates, quoting FactSet. The decline comes as some observers fear that President Donald Trump’s trade tariffs are beginning to impact the economy. Perhaps company leaders are operating under the assumption that the elevated tariffs will eventually be “watered down” through negotiations, rather than remaining a long-term economic burden.

Recession mentions in quarterly earnings calls of S&P 500 firms. (FactSet) Trump recently unveiled sweeping tariffs in addition to those announced in April in a move aimed at sparking a manufacturing boom. That has lifted the average U.S. tariff rate to 20.1%, the highest sustained level since the 1910s, according to estimates released by the World Trade Organization and the International Monetary Fund.

Markets, too, have largely looked past tariff-induced recession fears, with the S&P 500 rising 28% since the early April dip. Bitcoin, the leading cryptocurrency by market value, has surged to $122,000 from roughly $75,000, marking a 62% increase in four months, according to CoinDesk data.

According to JPMorgan, traders have been focusing on resilient corporate earnings and the expected economic recovery following the interim slowdown. More than 80% of S&P 500 companies have recently reported their second-quarter earnings, with over 80% beating earnings expectations and 79% surpassing revenue forecasts. This represents the strongest performance in four years.