Tuesday, January 4, 2022

Like every other market watcher these days, Calcbench is still poring over financial data to uncover fresh clues about the possible direction of inflation in 2022. We already wrote recently about the rising cost of revenue for large companies.

So today we asked: What about sales, general, and administrative (SG&A) costs? Where have they been going lately?

Figure 1, below, tells the tale. We charted SG&A costs among the S&P 500 from third-quarter 2018 through third-quarter 2021. Altogether, costs rose from $463.1 billion to $550.5 billion — a jump of 18.9 percent.

You can see the predictable drop in mid-2020 when much of the world was in lockdown. We also noted the decline in the fourth quarter of both 2019 and 2020; that might be a cyclical thing, and we’ll revisit the numbers later this spring to see if Q4 2021 shows a similar trend.

Regardless, that trend line in red tells the tale: SG&A costs are rising swiftly.

On the other hand, we also split that three-year period into two smaller periods and compared the two, to see whether SG&A costs have been accelerating since the world exited lockdown in summer 2020. If that were the case, that could be another clue that inflation is rising, yes?

Well, the numbers might not support that thesis. Consider:

  • From Q3 2018 to Q4 2019 (pre-lockdown), SG&A costs rose 10.7 percent;
  • From Q3 2020 to Q3 2020 (post-lockdown), SG&A costs rose 11.1 percent.

So SG&A costs are rising more rapidly today than they were pre-pandemic, but not by all that much.

For Further Research

If Calcbench subscribers want to choose their own adventure along these lines, our Multi-Company page or our Bulk Data Query page can pull the overall data. You could screen your sample population by industry (maybe some sectors are feeling more pressure than others?) or compare SG&A costs against revenue growth, for example.

There are lots of ways to play with the data, and the data itself — as always, we have that in spades.

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