Earnings Recession
a.k.a. Profit recession
Two or more quarters in a row where company profits, usually for a major stock index, fall compared with…
In plain English
Two or more quarters in a row where company profits, usually for a major stock index, fall compared with a year earlier.
An earnings recession is a slump in corporate profits, borrowed from the rule of thumb for an economic recession. Profits can shrink even while the wider economy keeps growing, for example when costs jump or a strong currency squeezes exporters.
It matters because stock prices ultimately lean on earnings. Falling profits can drag on indexes and on the risk mood that feeds into currencies.
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