U.S. Corporate Profit Outlook: Nothing Gold Can Stay
- The sharp resurgence in U.S. corporate profitability faces mounting cyclical headwinds, such as a tight labor market and a strengthening dollar, as well as structural obstacles, including the threat of de-globalization.
- We project corporate profits by incorporating the likely path of the cyclical and long-term drivers into a range of economic scenarios from a soft landing to stagflation.
- Our results indicate profits are likely to come under pressure even in our most optimistic economic scenarios. With this result in hand, we examine the strength of the relationship between U.S. corporate profits and credit spreads before concluding with an assessment of the investment implications.
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