So-called “Greedflation” may be propping up US corporate profits for now, but as the old saying goes, all “good” things must come to an end.

Eventually, pricing power will wane and persistently elevated wage bills will translate into margin compression or else voters (and thereby politicians) will tire of “profiteering” and take steps to curtail it.

There’s a third possibility: Recession. I’ll employ more scare quotes. A “good” old fashioned downturn would not only limit pricing power, but also destroy demand. As SocGen’s Albert Edwards put it this week, a recession “will likely see elevated corporate margins collapse. And my goodness they have a very, very long way to fall.”

But consensus doesn’t see it. Or, actually, analysts do see margin compression and another quarter of negative YoY EPS growth, but a “collapse” isn’t penciled in. In fact, what’s penciled in is a mostly meaningless 4.5% peak-to-trough EPS decline for the S&P 500.

Suffice to say that may be too optimistic. It’s not consistent with historical recessions. The average EPS decline, according to BofA calculations, is 24% peak-to-trough.

There is one place where earnings are trailing off, figuratively and literally: Small-caps.

“Small-cap EPS is already -13% from the peak, versus flat for the S&P 500,” BofA’s Michael Hartnett observed. Small-caps, he said, have “priced in a recession.”

Big caps plainly haven’t, though. And particularly not “The 7.” AAPL, MSFT, GOOG, AMZN, TSLA, META and NVDA are collectively trading at 30x, BofA remarked. The multiple for the rest of the index: 16x.