Year over year earnings for the S&P 500 declined by a little more than 23% in Q2 '08 versus Q2 '07. Expectations at the start of earnings season based on cumulative analyst estimates were -11%, so actual numbers were more than twice as bad.
This brings us to earnings expectations for the next few quarters. Currently, bottoms up estimates are looking for S&P 500 earnings to decline by 0.2% from Q3 '07 to Q3 '08. Q4 '08 estimates are looking for growth of 43.6%, and Q1 '09 estimates are at 28.1%. These high numbers are due to the extremely weak readings we got in Q4 '07 and Q1 of this year. Only time will tell if these estimates are too lofty, but based on the last few quarters, they most likely are.
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