If you listened only to the economic headlines, you might conclude that businesses and consumers are struggling. Inflation remains a concern, interest rates are elevated, and geopolitical uncertainty continues to dominate the news.
But there is another way to assess the health of the economy, look at what companies are actually earning in revenues and profits in the stock index.
Every three months, publicly listed companies around the world publish their financial results, revealing how much customers are spending, whether businesses are investing, and how profits are developing. Taken together, these reports offer something like a regular health check on the economy.
This earnings season is only in its first week, but the results so far are delivering some encouraging news.
According to FactSet, companies in the S&P 500, the index of America’s 500 leading listed companies, are expected to report earnings growth of +29% for the third quarter of 2026. If achieved, this would mark the third consecutive quarter of earnings growth exceeding 25%.
Even more encouragingly, ten of the eleven major sectors of the US stock market are expected to report rising profits, while all eleven are forecast to deliver revenue growth.
These figures still include forecasts for companies yet to report, but the early results suggest that corporate America remains in relatively good health.
One of the clearest signals comes from the banks. JPMorgan Chase reported that spending on its customers’ credit and debit cards increased by +10% compared with the previous year. Bank of America reported an +8% increase, alongside +7% growth in lending.
Consumer spending accounts for roughly two-thirds of the American economy. When households continue shopping, travelling and spending money on services, businesses benefit, employment is supported and economic activity continues.
The travel industry is telling a similar story. Delta Air Lines reported revenue growth of +16%, with premium travel revenue increasing +18%. These are hardly the numbers one would normally associate with an economy in serious trouble!
Meanwhile, industrial companies are reporting strong order books. RTX, the American aerospace and defence manufacturer, reported a +11% increase in quarterly sales and a record order backlog of $340 billion. The company also raised its full-year forecasts.
Taiwan’s TSMC, the world’s leading manufacturer of advanced semiconductors, reported revenue growth of more than +50% in its local currency, alongside a substantial increase in profits.
In Europe, French electrical equipment manufacturer Schneider Electric reported organic revenue growth of +17%, supported by demand for data centres and electrical infrastructure.
These results are emblematic of a broad strength in corporate earnings and a strong economy.
Consumers are spending. Businesses are borrowing and investing. Major companies are reporting growing revenues and profits.
For long-term investors, this is a useful reminder that economic headlines and economic reality are not always the same thing. Financial markets can become preoccupied with the latest political crisis, inflation announcement or interest-rate decision. But over time, one of the most important drivers of equity returns remains the ability of businesses to grow their earnings.
And so far, this earnings season suggests that the foundations of corporate growth remain remarkably resilient.
Disclaimer: The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Capital Strategies Limited or its related companies. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.
