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Analysts clearly are starting to factor in the possibility of a weaker economy. First-quarter earnings estimates for companies in the S&P 500 have been reduced dramatically so far this year. But is Wall Street still too bullish, dare we say delusional, about the rest of 2025?
According to FactSet, first quarter profits are expected to rise 7% from a year ago. That’s not bad, per se. However, analysts were forecasting an earnings increase of 11.7% for the first three months of 2025 at the end of December.
Profit projections usually come down throughout the quarter, but FacSet senior earnings analyst John Butters noted in a report that this is a steeper than usual decline. It appears that inflation concerns are weighing on estimates.
