The tendency of earnings estimates to fall

[Seth Ackerman]

Does anyone have any thoughts about what exactly is behind the awful
corporate profit picture right now? The guy from First Call was on CNN last
weekend rattling off a series of unbelievably atrocious earnings numbers,
both estimates of Q1 and forecasts of Q2, Q3, and Q4. Profits for S&P 500
companies seem to be falling at double-digit rates. I can't understand how
this is possible in an economy that is, after all, expanding, albeit at a
tortoise-like pace. Am I wrong to say that either (a) aggregate expenditure
must be falling in the economy or (b) labor costs are zooming leading to a
sizeable redistribution of national income from profits to wages? Of course,
there was a glut of investment. But the carnage doesn't seem to be limited
to companies that make investment goods.  

Seth