The Fortune 500 brought in more revenue last year than ever before in history—$18.1 trillion, up from $16.1 trillion in 2021 (and more than the GDP of China.) But profits fell sharply, to $1.56 trillion from $1.84 trillion.

Why? The reasons are clear to anyone running a business. Supply chain problems raised prices, labor shortages increased wages, the Fed raised interest rates, and pretty much anything that could increase costs happened. The notion of “greedflation,” favored by some on the left, is belied by the numbers. Revenues may have jumped 12%, but costs rose faster.

It’s worth looking at who bucked the trend, with rising profits. Energy companies topped the list, benefitting from the swing in oil prices. PBF Energy saw its profits jump 1145%, while Valero Energy had a 1140% increase. That was followed by companies who reaped the windfall from post-pandemic “revenge” travel: Expedia (up 2833%), Hertz (up 463%), Delta Air Lines (up 371%).

What does any of this tell us about the future? Not a lot. Falling profits don’t always augur a recession—although they often do. What happened last year is just an exaggeration of normal cyclical trends—profits are higher in the early parts of a recovery, and moderate in later stages. The profit-busting trend has continued this year, with corporate profits tumbling in the first quarter. And hedge fund investor Stanley Druckenmiller said last week he believes corporate profits could fall another 20% to 30% before it’s over.

Will the end result be a recession? “There’s going to be a recession at some point,” says John Leer, chief economist at Morning Consult. “It’s like asking, ‘Is it gonna rain.’ Well, eventually yes, it will rain.

Will Daniel unpacks all this in a piece on Fortune that you can read here. And you can play around more with all the great data behind the Fortune 500 list here.

Separately, Peter and I both wrote last week about how the letters “ESG” are falling out of favor in the U.S. But what they stand for—attention to a company’s impact on people and planet—has not. We will once again be assembling our community of top executives responsible for the opportunities formerly known as ESG in Atlanta Sep. 12-13. Attending will be top executives from companies like L’Oreal, PayPal, Cisco, Colgate and Meta. Our partner for the event is EVERFI. On the agenda: Sharing ideas on how to maintain the best of ESG while avoiding the political crossfire. If you are interested, you can learn more here, or shoot me an email.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Red lines

Swiss bank UBS will impose restrictions on what Credit Suisse bankers can do after the two banks merge, reports the Financial Times. The “red lines” include barring new clients from high-risk countries like Russia or Sri Lanka, and requiring permission from UBS before extending some loans backed by yachts or boats. Credit Suisse’s high-risk deals led to years of scandals and losses in the bank’s final years, leading to its eventual acquisition by UBS. 

London crypto

Venture capital firm Andreessen Horowitz will open its first international office in London later this year, citing the country’s greater “political will” towards supporting cryptocurrencies. The U.K. said last year that it would introduce new regulations for digital assets. Crypto firms are considering moving operations outside the U.S. following a Securities and Exchange Commission crackdown on companies like Binance and Coinbase. Fortune

Medicaid expansion

The CEO of the U.S.’s largest Medicaid insurer thinks that red state opposition to expanding government healthcare under the Affordable Care Act has hit a tipping point. “It’s actually been a net positive,” Centene CEO Sarah London tells Fortune’s Erika Fry. “And actually, most—even Republicans—would tell you that.” Centene jumped almost 278 places in the Fortune 500 list over the past decade, placing this year at rank 25 with $145 billion in revenue.

AROUND THE WATERCOOLER

How Home Depot’s CEO is navigating the remodeling dip as consumers pull back on big renovation projects by Phil Wahba

Boomers are pushing millennials out of the housing market as they hit the road for retirement, BofA says by Alicia Adamczyk

Paul Graham says remote work ‘does work initially,’ which is why it ‘fooled’ leaders who have since ‘changed their minds’ by Steve Mollman

Gensler can destroy the U.S. crypto industry, but he can’t kill crypto by Jeff John Roberts

Delta CEO says ‘revenge travel’ is taking over America and even he’s shocked by how much: ‘$300 billion—with a B’ by Jane Thier

Former co-CEO of failed U.S. lender First Republic lands on her feet with a new job—taking on one of the toughest tasks in international finance by Christiaan Hetzner

This edition of CEO Daily was curated by Nicholas Gordon.