2025 is a baseline for what sustained cost volatility looks like, S&P Global expert warns CFOs
Good morning. This year will likely be a defining one for how CFOs navigate cost volatility, global economic shifts, and their ripple effects through supply chains—factors that can translate into profit losses.
As we move further into the final quarter of 2025, companies are facing more expenses than many had budgeted for at the start of the year.
Fortune’s Nino Paoli reported on striking new research from S&P Global, which found that corporate expenses are projected to rise by at least $1.2 trillion in 2025 compared with expectations set in January.
So, how did analysts arrive at that figure? S&P Global estimates that global corporate margins have contracted by roughly 64 basis points, representing $907 billion in lost profit among companies covered by sell-side analysts.
According to the report, companies are sacrificing profit margins to absorb rising costs but are also passing part of the burden to customers. Roughly $592 billion of profit loss is being transferred to consumers through higher prices, while about $315 billion is being absorbed internally as lower earnings.
S&P Global’s analysis factors in additional cost pressures: about $155 billion in forecasted expenses from “uncovered public firms” and another $123 billion from private equity and VC-backed companies. Adding these two figures to the initial $907 billion brings total projected 2025 costs to roughly $1.2 trillion.
The study draws on forecasts from over 15,000 analysts tracking 9,000 public firms, representing around $111 trillion of the $130 trillion global equity market, or nearly 85% of its total value.
What it means for CFOs
What does such a massive increase in costs signal for finance chiefs as they plan for 2026? To find out, I asked one of the paper’s authors, Daniel Sandberg, global head of quantitative research and solutions at S&P Global Market Intelligence.
He said the $907 billion profit contraction reflects a broad repricing of costs worldwide.
“Tariffs were one clear surprise that wasn’t baked into forecasts at the start of the year, but they’re not the whole story,” Sandberg explained. “Rising wages, logistics bottlenecks, and higher spending on AI and automation have all contributed to margin pressure.”
For CFOs, Sandberg said: “This underscores the importance of treating 2025 not as an outlier, but as a baseline for what sustained cost volatility looks like. The mix of pressures varies by geography and sector, so the challenge is less about predicting shocks and more about building flexibility into budgets and supply chains to absorb them.”
When asked what surprised him most about the research, Sandberg pointed to the scale of the shift.
“A $900 billion expense shock—visible across models built by 15,000 sell-side analysts—shows just how dramatically market expectations can pivot when policy, inflation, and investment priorities shift at once,” he said.
Sheryl Estrada
sheryl.estrada@fortune.com
This story was originally featured on Fortune.com