Despite worries about President Donald Trump ‘s trade war, this earnings season shows that companies are choosing to focus on upcoming tailwinds, allowing investors to largely shrug off tariff concerns. “Animal spirits over tariffs” is the takeaway from this earnings season, Goldman Sachs chief economist Jan Hatzius said in a Monday research note. Excluding results from energy companies, which are subject to volatility, real revenues in the fourth quarter have gained 3.2% year over year due to resilient consumer spending, he said. In addition to the encouraging top-line results and commentary, a more lax regulatory business environment under the Trump administration is boosting corporate optimism, Hatzius added. “Deregulation might not be a near-term tailwind, but broader optimism and capex expectations have improved sharply … reinforcing our above-consensus capex view for 2025,” said the economist. He said there has been an uptick in business investing indicators, adding that the Institute for Supply Management ‘s purchasing managers’ index in manufacturing last month reached its highest level in two years . Further, an increase in business spending on new factories and artificial intelligence, as well as tax incentives and lower short-term borrowing rates for small businesses, will power around 5% growth in business investment this year, per Hatzius. “The improvement in business optimism supports our above-consensus view on investment spending,” he said.
Why Trump’s tariffs aren’t affecting the stock market
Feb 19, 2025
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