US companies' strong second-quarter earnings suggest that the fears of a recession are overblown.
According to the investment bank, the S&P 500 companies increased their earnings 9% year-on-year in the second quarter, with nearly three-quarters of the index's market cap reporting. Revenues have grown in all sectors.
The US economy contracted for two quarters in a row, according to data last week.
CEO and consumer confidence has collapsed as the Federal Reserve rapidly increases borrowing costs in an effort to cool red-hot inflation.
Goldman analysts, including chief economist Jan Hatzius, said in a note on Monday that corporate financial results and management guidance suggest otherwise.
If the company's guidance is to be believed, revenues will grow in the third quarter. Companies appear to be going to increase investment slightly, rather than cutting it.
Goldman said there are signs that the rise in wages is coming to an end. Only one of the 88 companies mentioned in their earnings reports said shortages were getting worse.
Progress on inflation appears to be more mixed. The index that tracks company price announcements stopped rising for the first time in eight quarters, but is still at a record high.
Q2 earnings have been better than expected. S&P 500 earnings increased 9% year-on-year on revenue growth.
The Fed will be able to keep hiking interest rates without being concerned about the economy. The pace of rate hikes is expected to slow after last week's 75 basis point increase.
There are 10 cheap stocks that are not exposed to a potential US recession that should be snapped up by investors.
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