Fall 2022 Snapshot of Expected Future S&P 500 Earnings

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter’s earnings.

The S&P 500′s earnings recession has deepened since since our last update three months ago. Standard and Poor continues to project the new earnins recession will last through at least December 2022. The following chart illustrates how the latest earnings outlook has changed with respect to previous snapshots:

Depending on who you talk to, an earnings recession has one of two definitions. An earnings recession exists if either earnings decline over at least two consecutive quarters or if there is a year-over-year decline over at least two quarters. The chart identifies the periods in which the quarter-on-quarter decline in earnings definition for an earnings recession is confirmed for both the Pandemic Earnings Recession (December 2020-December 2021) and the new earnings recession (March 2022-December 2022). The regions of the chart we’ve shaded in light red indicate the periods where year-over-year declines in earnings per share to qualify as an earnings recession would be satisfied.

Our next snapshot of the index’ expected future earnings will be in three months. Whether the S&P 500′s current earnings recession extends into 2023 will be determined during that time.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 9 November 2022. Accessed 11 November 2022.