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Jonathan Levin

The Path to a Soft Landing Runs Through Corporate Earnings

Company executives have been slow-walking expectations lower. The market’s collective credulousness may just keep the economy from crashing.

Will the Fed engineer a soft landing for the economy?

Will the Fed engineer a soft landing for the economy?

Photographer: Hulton Archive/Getty Images

It’s a little more than halfway through third-quarter earnings season in the US and projections of a looming economic apocalypse still aren’t reflected in corporate outlooks, as many stock-market bears expected.

There are a couple of plausible explanations. The first is that C-suite smooth talkers are simply managing expectations so as not to set off a cascade of negative sentiment among investors and analysts that makes a horrible year even worse. In that interpretation, we’re being unwittingly cooked like a pot of boiled frogs, and S&P 500 Index earnings per share projections are still poised to drop another 20% to 30%, as is typical in a US recession. The second interpretation — the more hopeful one — is that we’re witnessing the coveted “soft landing” in real time.