The COVID crisis in 2020, the inflation surge in 2022, and the partially realized debt crisis from 2022 - how did this continuous series of negative events impact US businesses?
Non-Financial vs. Financial Companies
To investigate this, we selected all reasonably significant non-financial companies in the US, accounting for approximately 95% of all public companies in the trading system, with a market capitalization of about 94% and trading volume of 92%.
As a result, we identified 969 non-financial companies (financial companies are always analyzed separately due to their distinct business model and structure). However, it's important to consider the dynamics and not solely focus on the most recent financial reports.
With a decade of continuous reporting, we had at least 795 companies available for a representative comparison.
Categorization and Reporting
Speaking of categorization, S&P, Bloomberg, and Reuters rely on the widely accepted corporate Global Industry Classification Standard (GICS), while macroeconomic reports fall under the purview of the NAICS (North American Industry Classification System).
The findings are quite interesting. Over the course of a year, revenues remained relatively stagnant, increasing by only 0.3% in nominal terms. Excluding the technology sector, revenue actually decreased by 0.4% year-on-year.
Over a two-year period (from Q3 2023 to Q3 2021), the growth rates were 14.1% and 14.3% respectively. Over four years (through Q3 2019), the growth rates were 33.6% and 32.4%. Finally, over a decade, revenue growth amounted to 64.7% and 59.2%, respectively.
Surprisingly, despite its prominence in global discussions, the technology sector does not dominate when considering revenue.
The recovery momentum observed in 2020 - 2021 came to an end in Q2 2022, but as of now, there are no apparent signs of degradation.
Conclusion
In conclusion, our analysis of current negative developments, including the COVID crisis, a spike in inflation, and debt problems, reveals mixed results for U.S. businesses. Short-term earnings growth is modest, but long-term trends demonstrate resilience and expansion. Importantly, there has been no significant degradation thus far, emphasizing the adaptability of U.S. businesses in the face of challenging economic conditions.