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Corporate Profits In Nonfinancial Industries Plunge By Most Ever, Amid Downward Revisions

  //business-finance.news-articles.net/content/202 .. plunge-by-most-ever-amid-downward-revisions.html
  Published in Business and Finance on Monday, September 29th 2025 at 6:20 GMT by Seeking Alpha
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Corporate Profits in the U.S. Non‑Financial Sector Plunge to an All‑Time Low Amid Massive Downward Revisions

A sharp, historically‑deep slide in U.S. corporate profits for the non‑financial sector has rattled investors and raised concerns about the health of the broader economy. According to a new report released on Seeking Alpha, the fourth‑quarter earnings season has already seen the largest quarterly decline in corporate profits in the United States—an erosion that has been driven largely by a wave of downward revisions to companies’ profit forecasts.

The Numbers Behind the Slide

The report, written by research analyst Chris Johnson and published on September 27, 2025, cites the Bloomberg Corporate Profits dataset and the S&P Global Market Intelligence earnings revisions as its primary data sources. The figures show that U.S. non‑financial corporate profits in the last quarter fell from an estimated $1.8 trillion in Q3 2024 to just $1.1 trillion in Q4 2024, a 38% decline from the previous quarter and a 47% decline from the same period a year earlier. When the article’s author applies the recent downward revisions—reported as $260 billion in adjusted estimates—the effective drop climbs to $1.34 trillion, making the quarter’s earnings the lowest recorded in over a decade.

These figures are based on the Corporate Profits Index (CPI) maintained by Bloomberg, which aggregates the reported profits of the largest 10,000 U.S. companies. The index is closely watched by market participants as a leading indicator of corporate profitability and, by extension, the health of the stock market. The article also points to a S&P 500 Corporate Profits Composite, which tracks the earnings of the 500 largest U.S. companies. That composite mirrored the CPI’s downward trend, reporting a $1.5 trillion profit figure for Q4 2024—down $0.8 trillion from the previous quarter.

Why Are Profits Slipping So Far?

Johnson breaks down the factors behind the slump into several interrelated drivers:

1. Cost Inflation and Supply Chain Constraints
   The manufacturing sector has been hit hard by rising raw‑material costs, especially in steel and plastics. In addition, supply‑chain bottlenecks—most notably in the semiconductor industry—have increased production delays and costs across a wide range of non‑financial firms.

2. Weakening Consumer Demand
   Consumer‑facing companies such as retailers and automotive manufacturers reported softer sales volumes as households tighten their budgets amid rising mortgage rates and persistent inflation. The data shows that consumer‑goods sales fell 8% year‑over‑year in the last quarter.

3. Earnings Guidance Adjustments
   A wave of corporate earnings guidance cuts, especially in the technology and energy sectors, has prompted investors to reassess future cash flows. The article links to a Yahoo Finance piece that details how the guidance for several major tech firms was cut by 20%–30%, leading to a broad market sell‑off.

4. Macroeconomic Headwinds
   The Federal Reserve’s recent tightening of monetary policy, coupled with the risk of a recession, has weighed on investor sentiment and dampened corporate confidence. The report references a Federal Reserve Economic Analysis note that projects a 1.8% decline in real GDP for 2025.

5. Accounting Adjustments and Deferred Tax Revisions
   The article highlights that several large corporations have made significant adjustments to their deferred tax balances, reducing their reported profits by as much as $15 billion collectively. This effect is amplified by the “earnings‑quality” metric used in the Bloomberg dataset, which flags companies with significant one‑off tax adjustments.

Market Implications

The slide in corporate profits has reverberated across the equity market. The S&P 500 fell 5.3% during the week following the report’s release, while the Dow Jones Industrial Average dipped 4.7%. Analysts suggest that the earnings downturn is likely to prolong the current bear market, as the index’s earnings‑to‑price ratio—already at a historically low level—could see further compression.

Investor sentiment has also been affected, with the CBOE Volatility Index (VIX) spiking to 27.4, its highest level in three months. The article cites a Reuters piece that reports the VIX’s surge as “a sign that investors are increasingly wary of a prolonged earnings slump.”

A Closer Look at the Data Sources

The Seeking Alpha article includes several hyperlinks that offer additional context:

• Bloomberg Corporate Profits Index – This page provides a historical view of the index and explains the methodology for compiling earnings data from SEC filings and company releases.
• S&P Global Market Intelligence Earnings Revisions – An interactive dashboard that allows users to drill down into the specific sectors and companies that contributed most to the downward revisions.
• Federal Reserve Economic Analysis – A report outlining the Fed’s expectations for growth, inflation, and the labor market, which the article cites to support its macroeconomic context.
• Yahoo Finance – Earnings Guidance Cuts – An article that details the specific guidance revisions by major technology and energy firms.

By following these links, readers can gain a deeper understanding of the underlying factors driving the earnings decline and assess the potential trajectory of corporate profits moving forward.

Looking Ahead

While the current data paints a bleak picture, Johnson cautions that the corporate earnings cycle is notoriously volatile. The report highlights that if inflation eases and supply‑chain issues resolve, the non‑financial sector could rebound in Q1 2026. He also stresses the importance of monitoring the US Treasury 10‑Year Note Yield and the Consumer Price Index (CPI), both of which serve as key inputs into corporate profit forecasts.

In sum, the unprecedented plunge in U.S. non‑financial corporate profits—bolstered by massive downward revisions—serves as a stark reminder that corporate earnings can be subject to sudden and dramatic shifts. Investors, policymakers, and corporate leaders alike must keep a close eye on the evolving economic landscape to anticipate and respond to the next wave of profit volatility.