2024 is sure to usher in many new things, like a million new micro-micro-micro trends we’ll forget about in two months. Hello, grandpa-core.
One thing we won’t leave behind in 2024, though: the will-they-or-won’t-they recession. But we’re finally turning a new page, at least when it comes to recession chatter in earnings calls.
In Q4 2023, that dreaded nine-letter word—“recession”—appeared in 239 earnings call transcripts, marking the lowest number of mentions since the first quarter of 2022, according to the Wall Street Journal’s analysis of FactSet data. And it’s a far cry from the 790 mentions in 2022’s fourth quarter.
Time heals all wounds, apparently, so it’s easy to forget how mind-numbingly inevitable recession talk was in recent earnings calls. Lagging sales? It’s the (potential) recession, stupid.
Now, when execs uttered the word in the fourth quarter, they were frequently talking about a specific problem in a struggling industry, and the alarmism of previous quarters was largely absent.
Take the earnings call for nightclub operator RCI Hospitality Holdings, during which CEO Eric Langan mentioned a recession when discussing the company’s efforts to tighten up margins. “Consensus is that we’ve seen the worst of it,” he said. “Customers seem to be getting more optimistic.”
But it’s still operating cautiously. “We’ve raised some prices here and there. We’ve adjusted some things,” he continued. “Our specials are starting to become more of a day of the week type deal, which is typical of what we see and have to do in a recession to keep our Mondays and Wednesdays solid.”
Meanwhile, industrial packaging company Greif did sound the alarm—but even though packaging dips can be a recession indicator, the concerns felt fairly siloed to ongoing, industry-specific challenges.
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“The fourth quarter…saw more of the same challenges we have now faced for five straight quarters, an extremely weak industrial sector with demand at staggeringly low levels,” CFO Larry Hilsheimer said in the company’s earnings call, noting that global demand for some products like steel and fiber drums and large plastics were tracking significantly down from the fourth quarter of 2022.
“This is truly an unprecedented time with no comparable period, including the Great Recession, where we saw a steep drop in drum volumes that quickly recovered,” he added.
To get a more complete picture, it’s useful to listen to financial experts looking across industries. At Goldman Sachs’ Financial Services Conference in December 2023, top banking executives shared their recession fears—or relative lack thereof.
Citigroup CFO Mark Mason, for instance, said that while "our economists are calling for a slowdown in growth as we go into 2024," it will "be certainly short of a significant recession globally."
“When I think about the US, we are looking at a soft landing,” he continued. “We are looking at more of a mild recession towards the back half of the year or so.”
It was a fairly similar story from JPMorgan Chase at the same conference.
“No big changes as we look forward. We don’t have a crystal ball…we plan for all scenarios, a range of outcomes,” Marianne Lake, co-CEO of consumer and community banking, said. “At the moment, we’ve moved from thinking that we were facing a mild recession with a probability of a soft landing to the reverse of that. So soft landing with the ultimate recession still being relatively high.”