Do you remember the good times of late 2011 to early 2014? Profits for companies in the S&P 500 just kept on rising and stocks rose along with them. The fun stopped after the second quarter of 2014 when profits rose 10 percent.
The growth rate first declined and then turned negative in the second quarter of 2015. Stocks eked out another small gain, but have essentially been flat since the second quarter of 2014.
Analysts now expect a 9.8 percent drop in corporate profits in the first quarter of 2016, the fourth consecutive quarter of declines and a near certain signal of a wholesale economic recession. The only time a so-called “earnings recession” did not lead to an economic recession was during the Asian financial crisis of 1998.
Bloomberg
