U.S. Corporate Earnings Remain Strong, but Consumer Momentum May Slow in the Second Half

Overview

By reviewing the U.S. second-quarter 2026 earnings season and combining corporate fundamentals, analyst forecasts, company-level alternative data, and management commentary, the report assesses the effects of corporate activity, consumer demand, tariff refunds, and artificial intelligence investment on the U.S. macroeconomy. The core conclusion is that corporate fundamentals remain strong, but near-term consumer resilience is supported by temporary factors such as tax refunds, and growth may cool materially over the coming months.

Core views

S&P 500 revenue and earnings outperformed expectations at the start of the quarter, and the growth was not driven solely by large technology companies. Consumer-related companies demonstrated resilience in the second quarter; however, slower July consumption data, low savings rates, weak real disposable-income growth, fading tax-refund stimulus, and high oil prices all point to weaker consumption in the second half. Tariff refunds can cushion cost pressures or support promotions, buybacks, and price cuts, but their one-time nature and accompanying price pressure weigh on the margin outlook. Discussion of artificial intelligence has become more specific and spending is accelerating, but its direct quantified impact on aggregate revenue, earnings, and employment remains limited for now.

Analysis framework

Using S&P 500 earnings data as the foundation, the analysis measures corporate activity through a real revenue metric that excludes energy and is deflated by non-energy GDP prices; it also compares median-company performance, sector sales, management earnings-call text sentiment, price-announcement tracking indicators, analyst forward-margin expectations, and alternative consumer data.

Methodology notes

• Macroeconomics and Corporate FundamentalsReal Corporate Revenue Metric

  Measures real corporate activity using S&P 500 revenue excluding energy, deflated by an energy-excluding GDP price measure.

  The metric is intended to reduce the interference of energy prices and sector-specific volatility, while comparing corporate revenue performance with real macroeconomic growth.

• Text AnalysisEarnings-Call Consumer Sentiment Indicator

  Quantifies the tone of management discussion regarding consumer conditions during earnings calls.

  The indicator is used to observe management's real-time assessment of consumer health; the report shows it rebounded to a more-than-four-year high.

• Pricing and MarginsCorporate Price Announcement Tracking Indicator

  Tracks announcements and discussions involving input and output prices during earnings calls.

  It is used to identify sector price pressures and, together with analyst revisions to forward margins, assess pressure on corporate guidance.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• U.S. Large-Cap Equities

  Corporate earnings and real revenue growth support overall fundamentals

  Strengths

  Real revenue growth is strong, and earnings significantly exceeded expectations at the start of the earnings season.

  Weaknesses

  Valuation changes at large technology companies provided a substantial boost to total earnings growth, creating a divergence between index performance and the median company.

  Comparison

  Real revenue growth for the median S&P 500 company was below that of the overall index and was more moderate excluding technology.

  Risks

  Slower consumer activity, elevated oil prices, and downward revisions to margin expectations may weigh on subsequent earnings.

• U.S. Consumer Sectors

  Second-quarter consumer sales and improved management sentiment provide near-term support

  Strengths

  Both consumer discretionary and consumer staples sales continued to grow, while consumer sentiment reached a more-than-four-year high.

  Weaknesses

  The improvement in consumption was supported by temporary factors such as large tax refunds, and July indicators have already slowed.

  Comparison

  Consumer sectors receiving larger tariff refunds are also among those facing more pronounced price pressure and downward revisions to margin expectations.

  Risks

  Low savings rates, weak real disposable-income growth, fading tax-refund effects, and high oil prices.

• Artificial Intelligence-Related Equities

  Increased corporate discussion and service spending indicate continued investment in applications

  Strengths

  Management discussion has shifted from broad concepts toward more specific use cases, while recent spending growth has accelerated.

  Weaknesses

  Quantified evidence on specific use cases and earnings remains limited, and current inference costs represent a very low share of revenue.

  Comparison

  The crowding-out effect of artificial intelligence spending on other corporate activity and net employment is currently assessed as relatively mild.

  Risks

  Investment growth may outpace verifiable returns, and rising costs could affect corporate margins.

Key data

• S&P 500 Earnings Growth (Excluding Large Technology Valuation Changes)31% year over yearThe report states that mark-to-market gains on private-equity investments at large technology companies made a significant contribution; earnings remained strong even after excluding this effect.
• Median S&P 500 Company Earnings Growth14% year over yearReflects a degree of breadth in earnings growth.
• S&P 500 Real Revenue Growth6.4% year over year in the second quarter of 2026Excluding energy and deflated by non-energy GDP prices, this was the fastest growth rate since 2021.
• Sales Growth at Consumer-Related CompaniesMedian consumer discretionary company: 5.9% year over year; median consumer staples company: 3.9% year over yearConsumer demand was healthy in the second quarter.
• Forecast for Real Consumption Growth in the Second Half1% to 1.5% year over year in the second half of 2026Below market consensus, mainly due to fading tax-refund support, weak cash flows, and the impact of high oil prices.
• Tariff Refunds DisbursedMore than $100 billionDisbursed over the past three months and generally viewed by companies as a one-time benefit.
• Share of Management Teams Discussing Artificial Intelligence65%S&P 500 management teams mentioned artificial intelligence during second-quarter earnings calls.
• Share Quantifying Artificial Intelligence ImpactsSpecific applications: 11%; earnings: 2%Discussion of artificial intelligence applications has become more specific, but quantifiable financial contributions remain limited.
• Share Discussing Artificial Intelligence-Related Expenses7%Up from 2% a year ago; artificial intelligence inference expenses are estimated at approximately 0.1% of S&P 500 revenue.

Impact & implications

For markets, strong second-quarter earnings support U.S. equity fundamentals, but tax-refund-driven consumer strength should not be extrapolated linearly into the second half. Sectors such as consumer staples, consumer discretionary, and industrials that received larger tariff refunds may benefit from short-term cost cushioning, but also face more evident price pressure and downward revisions to forward margins. Artificial intelligence remains an important investment theme, but the current focus should be on rising investment, implementation of specific use cases, and cost returns, rather than assuming it has already broadly translated into significant earnings contributions.

Risks

• Growth in real consumer spending may fall below expectations, especially after tax-refund stimulus fades.
• High oil prices and related cost pressures may further erode household purchasing power and corporate margins.
• Tariff refunds are a one-time benefit and cannot replace sustained demand or cost improvements.
• Industries receiving larger refunds face stronger price pressure and downward revisions to forward-margin expectations.
• Artificial intelligence investment is accelerating, but financial returns have not yet been broadly quantified, creating valuation and execution risks.

What to watch

• July and subsequent retail sales, real consumption spending, and household cash-flow data.
• Same-store sales, average ticket size, and management guidance at consumer-related companies after tax-refund effects fade.
• Price announcements, cost pressures, and forward-margin revisions in consumer staples, consumer discretionary, and industrial sectors.
• Oil-price changes and their transmission to inflation, household real income, and corporate costs.
• Artificial intelligence service spending, inference costs, quantified use-case examples, and actual impacts on earnings and employment.