FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.
For reference purposes, here are two charts as seen in the “Earnings Insight” report of June 13, 2025:
from page 26:
(click on charts to enlarge images)
from page 27:
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I post various economic forecasts because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.
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The Special Note summarizes my overall thoughts about our economic situation
As many are aware, Refinitiv publishes earnings estimates for the S&P500. (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings label)
The following estimates are from Exhibit 24 of the “S&P500 Earnings Scorecard” (pdf) of June 13, 2025, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts. For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; the Year 2019 value is $162.93/share; the Year 2020 value is $139.72/share; the year 2021 value is $208.12/share; the year 2022 value is $218.09/share; the year 2023 value is $221.36/share; and the year 2024 value is $242.73/share:
Year 2025 estimate:
$263.14/share
Year 2026 estimate:
$299.97/share
Year 2027 estimate:
$339.25/share
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I post various economic forecasts because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.
_____
The Special Note summarizes my overall thoughts about our economic situation
For reference purposes, the most current estimates are reflected below, and are as of June 12, 2025:
Year 2025 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $255.76/share
-From a “bottom up” perspective, “as reported” earnings of $236.25/share
Year 2026 estimates add to the following:
-From a “bottom up” perspective, operating earnings of $296.06/share
-From a “bottom up” perspective, “as reported” earnings of $275.17/share
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I post various economic forecasts because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.
_____
The Special Note summarizes my overall thoughts about our economic situation
As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the Fannie Mae Home Price Index, will continually climb.
The detail of the survey is interesting. Of the survey respondents, only two (of the displayed responses) forecasts a cumulative price decrease through 2029.
The Median Cumulative Home Price Appreciation for years 2025-2029 is seen as 3.40%, 6.60%, 10.44%, 14.70%, and 19.11%, respectively.
For a variety of reasons, I continue to believe that these forecasts will prove far too optimistic.
I have written extensively about the residential real estate situation. For a variety of reasons, it is exceedingly complex. While many people continue to have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis. Residential real estate is an exceedingly large asset bubble. As such, from these price levels there exists potential for a price decline of outsized magnitude.
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The Special Note summarizes my overall thoughts about our economic situation
For reference purposes, here is Total Household Net Worth from a long-term perspective (from 1945:Q4 through 2025:Q1). The last value (as of the June 12, 2025 update) is $169.307269 Trillion:
(click on each chart to enlarge image)
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Also of interest is the same metric presented on a “Percent Change from a Year Ago” basis, with a current value of 3.8%:
As seen in the above-referenced CalculatedRisk post:
The net worth of households and nonprofits fell to $169.3 trillion during the first quarter of 2025. The value of directly and indirectly held corporate equities decreased $2.3 trillion and the value of real estate decreased $0.2 trillion.
As one can see in the above chart, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength. The second outsized peak was in 2007, near the peak of the housing bubble as well as near the stock market peak. A third outsized peak appears to have formed between 2021 and 2022.
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The Special Note summarizes my overall thoughts about our economic situation
The St. Louis Fed’s Financial Stress Index (STLFSI4) is one index that is supposed to measure stress in the financial system. Its reading as of the June 12, 2025 update (reflecting data through June 6, 2025) is -.8111:
source: Federal Reserve Bank of St. Louis, St. Louis Fed Financial Stress Index [STLFSI4], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed June 12, 2025: https://fred.stlouisfed.org/series/STLFSI4
Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.
Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).
Here are summary descriptions of each, as seen in FRED:
The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.
The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.
For further information, please visit the Federal Reserve Bank of Chicago’s web site:
Below are the most recently updated charts of the NFCI and ANFCI, respectively.
The NFCI chart below was last updated on June 11, 2025 incorporating data from January 8, 1971 through June 6, 2025 on a weekly basis. The June 6 value is -.51212:
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 12, 2025: http://research.stlouisfed.org/fred2/series/NFCI
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The ANFCI chart below was last updated on June 11, 2025 incorporating data from January 8, 1971 through June 6, 2025, on a weekly basis. The June 6 value is -.47758:
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 12, 2025: http://research.stlouisfed.org/fred2/series/ANFCI
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I post various indicators and indices because I believe they should be carefully monitored. However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.
_____
The Special Note summarizes my overall thoughts about our economic situation
There are a variety of economic models that are supposed to predict the probabilities of recession.
While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.
Please note that each of these models is updated regularly, and the results of these – as well as other recession models – can fluctuate significantly.
Currently (last updated June 9, 2025 using data through May 2025) this “Yield Curve” model shows a 28.301% probability of a recession in the United States twelve months ahead. For comparison purposes, it showed a 30.4489% probability through April 2025, and a chart going back to 1960 is seen at the “Probability Of U.S. Recession Predicted by Treasury Spread.” (pdf)
Smoothed recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. This model was originally developed in Chauvet, M., “An Economic Characterization of Business Cycle Dynamics with Factor Structure and Regime Switching,” International Economic Review, 1998, 39, 969-996. (http://faculty.ucr.edu/~chauvet/ier.pdf)
This model, last updated on June 2, 2025 currently shows a .48% probability using data through April 2025.
Here is the FRED chart:
Data Source: Piger, Jeremy Max and Chauvet, Marcelle, Smoothed U.S. Recession Probabilities [RECPROUSM156N], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed June 10, 2025: http://research.stlouisfed.org/fred2/series/RECPROUSM156N
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The two models featured above can be compared against measures seen in recent posts. For instance, as seen in the April 13, 2025 post titled “The April 2025 Wall Street Journal Economic Forecast Survey“ economists surveyed averaged a 45% probability of a U.S. recession within the next 12 months.
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The Special Note summarizes my overall thoughts about our economic situation
