Business

Corporate America is trying to tell us something about the economy, top analyst says: a 3-year recession for ‘much of the private economy’ ended in April

Published

3 months ago

November 5, 2025

Come on in, the water’s warm. That’s what a top Wall Street analyst is saying about this earnings season, arguing that it’s validating his long-running thesis that the economy was in a secret kind of recession that most economists just didn’t see for three years now. The robust-third quarter earnings season is revealing that his thesis of a “rolling recovery” for the economy is under way, with the “rolling recession” retreating into the past.

During the pandemic and its grinding aftermath, much of the U.S. private sector endured what Morgan Stanley strategists, led by chief equity analyst Mike Wilson, have labeled a “rolling recession” — a drawn-out downturn that escaped headline GDP but left deep marks in business hiring, earnings, and confidence. “Most of the private sector of the U.S. economy has not been hiring and/or has been trimming headcount for years,” the report from November 3 notes, “so there is less need to be reactive to further slowing.”

One of the most remarkable findings of the current earnings season, Wilson argues, is that revenue “beat” rates are more than double their historical averages, and median stock earnings growth has notched its fastest pace since 2021. The S&P 500’s collective revenue surprise now stands at 2.3% compared to its 1.1% norm, signaling not just stabilization but firming top-line momentum. Wilson notes it’s the fastest earnings growth since the third quarter of 2021 and “marks the end of one of the longest earnings recessions on record,” he added, referring to a period of two or more consecutive quarters of falling corporate profits, year-over-year. Stanley said he thinks this is “an underappreciated story” and sees the trend continuing into 2026.

April as an inflection point

Wilson says the economic cycle quietly reset in April — a month marked by President Trump’s “Liberation Day” when he unveiled a worldwide round of “reciprocal tariffs” on April 2. Without linking the two events, Wilson continued his refrain that April marked the end of the rolling recession, citing a rebound in both survey and company guidance data. Earnings revisions, which serve as a key real-time indicator of corporate sentiment and future prospects (and Wilson’s “preferred” proxy), made a “V-shaped” recovery at that time. Median stock earnings growth among the Russell 3000 hit 11% for the third quarter, a sharp rise from 6% in the previous quarter and just 2% at the start of 2025.

Cost structures have become significantly leaner as companies rightsized during the downturn, Wilson said, pointing to how wage expense for corporates has come down significantly in growth rate terms. Most of the excess labor cost was wrung out during the depths of the rolling recession, aligning wage expenses with profitability and setting up businesses to benefit disproportionately from any top-line improvement. “A little bit of firming in top line and pricing power goes a long way,” he argues, suggesting that bottom-line leverage will be greater now that costs are restrained.

The National Federation of Independent Business (NFIB) Small Business Survey also shows stabilization in pricing power for the first time in years. And while risks remain — such as a hesitant Federal Reserve, tariffs, or funding stress — most of the indicators now point toward renewed expansion, not contraction.

Seen from a worker perspective, this dynamic is altogether more brutal and bears a few viral catchphrases to sum up the shift from over-hiring to lean and efficient: The “Great Resignation” turning into the “Great Flattening” and resulting in a workforce that went from “quiet quitting” to “job hugging.” It’s a tough landscape for Gen Z, which is facing an unemployment rate roughly double the national average, and finds itself having to convince corporations to loosen their “low-hire, low-fire mentality.”

Shifts in Market and Policy

Markets themselves have responded to this quiet recovery ahead of the consensus, with Wilson wryly noting that “as usual, stocks have figured this out ahead of the consensus forecaster.” The positive correlation between equity returns and bond yields, coupled with renewed breadth in stock performance, hints at a market that expects growth to hold steady or even reaccelerate — even as rate cut expectations have moderated and trade tensions have diffused since a pivotal meeting between the U.S. and China in October. The S&P 500 is forecast for strong earnings per share growth into 2026, and equity strategists see broadening leadership beyond just the “Magnificent 7” mega-cap stocks that dominated the early recovery phase.

What corporate America is trying to tell us, in other words, is that the private side of the economy has quietly worked through a lot of pain for several years now and is poised for broader growth. The narrative of recession has shifted to one of potential acceleration, driven by robust earnings, lean cost bases, and an uptick in business confidence and investment, including a forecasted rebound in merger-and-acquisition activity and capital spending.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.

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Business

Davos 2026: reading the signals, not the headlines

Published

31 minutes ago

January 21, 2026

Jace Porter

Davos 2026: reading the signals, not the headlines | Fortune

Louisa Loran advises boards and leadership teams on transformation and long-term value creation and currently serves on the boards of Copenhagen Business School and CataCap Private Equity. At Google, Louisa launched a billion-dollar supply chain solutions business, doubled growth in a global industry vertical, and led strategic business transformation for the company’s largest customers in EMEA—working at the forefront of AI, data, and platform innovation. At Maersk, she co-authored the strategy that redefined the brand globally and doubled its share price, helping pivot the company from traditional shipping to integrated logistics. Her career began in the luxury and FMCG space with Moët Hennessy and Diageo, where she built iconic brands and led innovation at the intersection of heritage and digital transformation.

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Business

Hotels allege predatory pricing, forced exclusivity in Trip.com antitrust probe

Published

1 hour ago

January 21, 2026

Jace Porter

China’s hotels are welcoming record numbers of travelers, yet room rates are sinking—a paradox many operators blame on Trip.com Group Ltd.

For Gary Huang, running a five-room homestay in the scenic Huzhou hills near Shanghai was supposed to secure his family’s financial future. Instead, he and other hoteliers in China’s southeastern Zhejiang province say nightly rates have fallen to levels last seen more than a decade ago, as Trip.com’s frequent discount campaigns force them to cut prices simply to remain visible on China’s dominant booking platform.

“The promotion campaigns now are almost a daily routine,” said Huang, who asked to use his self-given English name out of concern of speaking out against Trip.com. “We have to constantly cut prices at least 15% to attract travelers. We have no choice but to go along with the price cuts.”

Trip.com has been central to China’s post-pandemic travel rebound, connecting millions of travelers with small operators like Huang. But for many hotels, visibility—and sometimes survival—comes at the expense of profits.

That dynamic is now at the heart of Beijing’s antitrust probe. Regulators allege Trip.com is abusing its market position, with analysts citing deflation across the sector as the government’s main concern. Interviews with lodging operators, industry groups and travel consultants describe a system where constant price-cutting and opaque policies are eroding profitability, even as demand rebounds.

Trip.com has said it’s cooperating with the government’s investigation. The company’s stock dove more 16% since the probe was announced a week ago.

Revenue per room—a key hotel metric—was flat across China in 2025, even as other Asian markets saw gains, according to Bloomberg Intelligence. Marriott International Inc.’s revenue per room in China fell 1% most of last year, while Hilton’s China room revenue trailed its regional peers.

The company controls about 56% of China’s online travel market, according to China Trading Desk, and has grown into the world’s largest booking site. Its dominance has helped fuel domestic tourism’s recovery—nearly 5 billion trips were logged in the first three quarters of 2025—but operators say the benefits are being offset by falling room yields.

“The market has developed unevenly and innovation is lacking due to monopolistic practices,” said He Shuangquan, head of the Yunnan Provincial Tourism Homestay Industry Association that represents some 7,000 operators. “The entire online travel agency sector is stagnating in a pool of dead water.”

‘Pick-one-of-two’

The broader challenge is oversupply and cautious consumer spending. In regions like Yunnan, hotel capacity has tripled since the pandemic, just as travelers tightened budgets. Consultants note that while people are traveling more, they’re spending less—leaving hotels slashing rates to fill empty beds and posting billions in losses.

For operators like Huang, the paradox is stark: the platform that delivers customers is also accelerating the race to the bottom. The complaints center around Trip.com’s “er xuan yi,” Mandarin for pick-one-of-two exclusivity arrangements—a practice that Chinese regulators have repeatedly vowed to stamp out.

Trip.com categorizes merchants into tiers with “Special Merchants” enjoying the most visibility and traffic, Yunnan Provincial Tourism’s He said. However, these top-tier merchants are typically prohibited from listing on rival platforms like Alibaba’s Fliggy, ByteDance’s Douyin or Meituan. Merchants who aren’t bound by these exclusive arrangements report being effectively compelled to offer the lowest prices on Trip.com’s online booking platform Ctrip, or risk facing a raft of measures like lowered search rankings.

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Business

CEOs at Davos are buying into the agentic AI hype

Published

2 hours ago

January 21, 2026

Jace Porter

Good morning. The atmosphere here at the World Economic Forum in Davos is all about nervous excitement as the Trump administration descends on the normally quaint but currently chaotic ski town in the Alps.

President Donald Trump will be making remarks just a couple hours from now, and Fortune will be reporting live from USA House on the main promenade, with insights from government officials and chief executives during and immediately following the president’s conversation. Keep an eye on our livestream, here https://fortune.com/2026/01/21/ceos-davos-buy-into-the-agentic-ai-hype/.

Elsewhere around town, CEOs are setting their agendas for the year. Here’s what’s top of mind for a few of them:

This will actually be the year of agentic AI. The first time I heard the term “agentic AI” was at Davos last year. For all the hype around it, does the average CEO really know what it is or how to deploy it? And is AI good enough yet for agents to replace or even significantly assist human employees? The answer appears to be yes. Google Gemini head Demis Hassabis told me that Gemini 3 achieved some milestones that allow agentic AI to truly proliferate in terms of its capabilities. ServiceNow CEO Bill McDermott is also an emphatic “yes,” and says he is already using it to do things like automate his IT department (without doing layoffs, he stresses; he says he has repurposed employees instead). He thinks other CEOs are ready to do the same.

Get ready for Google glasses—for real, this time. A decade ago, Google launched its Google Glass eyewear to widespread mockery. Hassabis thinks the timing was just off; at the time there was no super app to go on the platform. AI has changed that, and Hassabis is bullish on Gemini glasses being the future form for consumer AI. Meta is betting the same thing, and OpenAI is also reportedly considering a super-device, but it doesn’t seem like either can match Gemini’s capabilities any time soon.

There’s artificial intelligence, and now there’s also “energy intelligence.” Schneider Electric CEO Olivier Blum says that nailing energy intelligence is his mission this year. By that he means he wants to capture data from various energy sources into a single “data cube,” filter it, and use agentic AI so customers can manage it all in one place to find opportunities to save power and money. “Our job is to make sure we go to the next level of energy technology to make energy more intelligent,” he told me yesterday. If he can achieve it, he sees a 7%-10% annual growth opportunity ahead.

Greenland: national panic or national security risk? I’ve heard various reactions to President Trump’s desire for a full U.S. takeover of the huge island—from outrage to vigorous support. If he does get his wish (which some here think is likely), could Europe retaliate by making life harder and more restrictive for big U.S. tech companies? That was one CEO’s consideration. Said another: “Clear-eyed people can agree that that is a national security concern. And having a national security concern is not just a U.S. concern, it’s also a NATO concern.” They were optimistic that the in-person meetings this week would help move the matter in a positive direction. You can follow all our Davos coverage—including Fortune live interviews today with Ray Dalio, Dara Khosrowshahi and more—right here.—Alyson Shontell

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

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The markets

S&P 500 futures are up 0.19% this morning. The last session closed down 2.06%. STOXX Europe 600 was down 0.41% in early trading. The U.K.’s FTSE 100 was down 0.02% in early trading. Japan’s Nikkei 225 was down 0.41%. China’s CSI 300 was up o.09%. The South Korea KOSPI was up 0.49%. India’s NIFTY 50 was down 0.3%%. Bitcoin was at $89K.