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Number of S&P 500 companies citing inflation on earnings calls hits 10-year high

Data: FactSet; Chart: Axios Visuals

Inflation is on everyone’s mind, as prices for goods and services have jumped over the last few months. But many of the market participants and company executives who are talking about inflation are also admitting that it may not be that big of a deal.

Why it matters: Runaway prices could erode consumer spending power and pressure corporate profit margins.


Catch up quick: New survey data released on Monday from Deutsche Bank shows 61% of financial market professionals say higher than expected inflation is the largest risk to markets.

During the Q1 earnings season, 197 of the S&P 500 companies discussed inflation on earnings calls. This was the highest number in at least 10 years, according to FactSet.

But, but, but: FactSet analyst John Butters took a closer look at what companies were saying and found — despite rising costs — many of them were actually raising expectations for profit margins and net earnings over the past three months.

  • "For the entire S&P 500, both the estimated earnings growth rate (34.8% vs. 24.9%) and estimated net profit margin (12.1% vs. 11.4%) are also higher today compared to March 15," Butters wrote in a report.

Go deeper: And while the Deutsche Bank survey found market pros are concerned about inflation, it also found that 72% believe the recent bout of inflation is either "mostly transitory" or "virtually all transitory."

  • That suggests they think inflation is, at most, a temporary risk.

The intrigue: For years, the primary way companies lifted profits was by cutting costs. Now, it seems companies are finding they can raise prices faster than costs are rising, thanks to a customer ready to spend.

Threat level: Runaway inflation can become a self-fulfilling prophecy. If enough people are worried about it even in the short term, business owners could raise prices proactively, or consumers could start hoarding goods.

What’s next: As we enter the second half, it remains to be seen when the supply chain bottlenecks and the labor shortages driving inflation will eventually ease up.

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First things first. We have a deep respect for the public school system and teachers in general. We have several friends and family members that are educators. This post is not a manifesto for why everyone should drop the public system and start homeschooling their children. In fact, it's not meant to sway you in one way or the other. It's simply a chronicle of the thought process that Lynn and I employed when making the final decision this year to give homeschool a shot.

Choosing to home school our children wasn't an easy or quick decision, which it shouldn't be. But we considered every option and weighed the pros vs the cons. We made our ultimate decision based on what is best for our children and our family.

Education is a critical part of every child's development. So it's no wonder that parents (and even non-parents) are so passionate about schooling.

We're no different.

Yet we've still been on the receiving end of the awkward glances and ill-worded reactions when we explain that we're taking education in-house. I get it. It's different. It's not in the mainstream, and that's OK.

So let me outline for you our 5 core reasons for traveling this path.

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