S&P 500 Earnings Are Down Dramatically

By Doug Marshall
Market Assessment
Published March 25, 2009


It's no secret that the economy is doing poorly. But until I saw this chart by Chart of the Day, I didn’t know how poorly. This chart provides some perspective as to the magnitude of the current economic decline.

Twelve month earnings, as-reported by the S&P 500, have declined over 80% over the past 18 months, making this by far the largest decline on record (the data goes back to 1936).


In fact, real earnings have dropped to a level not seen since the 1930s and 40s – the back end of the Great Depression.

While earnings have been struggling since the third quarter of 2007, it was the latest quarter, (fourth quarter 2008) the first full quarter following the financial meltdown, where the real damage was done.

During fourth quarter 2008, the S&P 500 came in with its first negative earnings quarter ever and the amount lost during the quarter was more than the index has ever earned during a single quarter.

Sorry for the dismal news but I thought you’d be interested in seeing this very revealing chart.

Source:
Chart of the Day is provided by Barron’s. Go to chartoftheday.com to subscribe.