CS Insights: Inflation, Presidential Politics and Punting Until Next Year

August 2024

What inflation?

Inflation dominates the headlines, but not necessarily earnings calls anymore.

Over the past two years, we’ve observed a steady decline in questions and commentary regarding both inflation and consumer pricing on corporate earnings calls in the U.S. Not surprisingly, this trend correlates with inflation readings.

The outlier to the broader trend pertains to companies in the consumer goods, specialty retail, food, and travel and leisure sectors, where pricing has remained a consistent topic.

Since the beginning of 2022, the U.S. companies that have discussed consumer pricing the most, according to a review of corporate earnings call transcripts, include: The Hershey Co., Clorox, Coty, J.M. Smucker Co., Mondelez International, Skechers, Ralph Lauren, Under Armour, Kraft Heinz, Carters, McDonald’s, PepsiCo and Procter & Gamble.

At the same time, we’ve actually seen an increase in news coverage about inflation and consumer pricing since May of this year. The 2024 Presidential Election and the continued debate over Fed Rate Cuts are primarily to blame, with coverage of both topics driving an increase in media articles.

“I know you’re not giving 2025 guidance yet, but….”

How many different ways can a company executive indicate they’re not giving guidance for 2025 yet? It turns out – quite a few.

Every summer (for companies on a traditional calendar-year reporting cycle), sell side analysts pressure company executives to provide a clue as to the trends or factors that may impact the following year’s outlook. And every year, executives find ways to politely tell analysts: wait!

The trend is remarkably similar every year. Variations forQ2 this year included questions and responses like:

Wall Street Focuses on the Presidential Election

We’ve been closely following how the U.S. Presidential Election factors into earnings calls all year. While there was an increase in discussion of the topic earlier this year, it fell short of the same time period in 2020.

That changed in a big way during the most recent earnings cycle, with questions and commentary jumping by 170 percent compared to the first quarter reporting period. Interest even eclipsed the comparable period in 2020.  

‍

Key topics included:

• Impact of the election on advertising spend at media companies, with many media executives forecasting an increase in ad dollars with the addition of Vice President Kamala Harris to the race. On the flip side, the tight ad market for the fall has led some companies to predict their marketing budgets will have to increase to compete.  
• Elongated sales cycles as customers monitor the economic environment and the impact of the election on key policies, especially across industries like cleantech, energy, housing and financial regulation.
• The potential for higher tariffs under a second Trump administration.