The WSJ observes that “almost 60% of the corporate earnings generated between 2022 and the third quarter of 2024 can be attributed to public-sector spending and investment.” This suggests that the administration’s economic strategy to push the 25% of US GDP that flows through area code 202 to the private sector could result in weaker corporate profits in the short run.
Source: WSJ, 3/12/25
Source: NewEdge Wealth
Consensus now expects EPS growth of 12% in 2025 and 14% in 2026. RiskBridge assumes 6% EPS growth in 2025, so the market has yet to fully contemplate this potential slowdown in corporate profits.
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