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🔮   Does Consumer Spending Drive Earnings Growth?

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It would seem evident that most investors would understand that consumer spending drives economic growth, ultimately creating corporate earnings growth. Yet, despite this somewhat tautological statement, Wall Street appears to ignore this simple reality when forecasting forward earnings. As discussed recently, S&P Global’s current estimates show earnings are growing far above the long-term exponential growth trend from 1936. Unfortunately, with regularity, earnings tend to repeatedly revert to the long-term trend due to economic recessions, financial crises, or other events that crimp economic activity. In the chart below, earnings haven’t stayed at the top of the long-term growth trend channel for long.

ZeroHedge Opinion     Jun 06, 2025