Reporting season starts next week, and analysts collectively have great expectations for corporate America.

Consensus expects 8% YoY profit growth for the S&P in aggregate, the second-highest pre-season bar to clear since 2021, when the C-suite was hurdling pandemic comps.

By sector, Wall Street expects the briskest growth from Comms Services and Tech, at 19% and 18%, respectively. Energy companies will likely report a sharp YoY profit decline.

The figure below, from Goldman, gives you some context. The only time the bar was higher post-2021 was Q2 of 2024, when analysts expected 9% profit growth.

Corporate America easily outperformed expectations in the years after the public health crisis, and often by a very wide margin. The median company probably grew the bottom line by 6% last quarter, consensus reckons.

As Goldman’s David Kostin noted, the relatively high bar means “the magnitude of EPS beats will likely moderate.” Investors are likely to be more sensitive to misses than usual, given pared back expectations for Fed easing in 2025 and the uncomfortable juxtaposition between very rich aggregate valuations and elevated US yields, as discussed at some length in the latest Weekly.

If you’re the C-suite, it’s often worse to miss on the top line than the bottom line. In simple terms: Earnings are malleable, but sales are just sales. Kostin went on to say clients are concerned about revenue growth as the US economy cools and inflation abates. “In particular, investors have focused on whether volume growth for goods-producing companies will be able to offset disinflation,” he said.

And then there’s the dollar discussion. Greenback strength’s a headwind for US multinationals, and the dollar’s on a tear. Around a third of S&P 500 sales come from overseas.

The scatterplot, from Goldman, shows you the relationship between dollar strength and sales beats. “Historically, the frequency of reported revenue beats has been lower during periods of US dollar strength [which] implies fewer firms will beat consensus sales forecasts this reporting season,” Kostin said.

Obviously, analysts will be keen on any management commentary around tariffs and corporate tax cuts. The former are presumed to be a drag one way or another, while the latter are a mechanical boon and, some would argue, a handout to the rich.

The risks, then, are “two-sided,” Kostin wrote, in the course of reiterating Goldman’s house view, which calls for 11% aggregate EPS growth in 2025. “Each 1ppt reduction in the statutory domestic tax rate would boost S&P 500 EPS by slightly less than 1%, while each 5ppt increase in the effective US tariff rate would reduce S&P 500 EPS by about 1-2%,” he added.