America's earnings recession deepens

Corporate America, we have a problem.

The fourth quarter of 2015 looks to be the third straight quarter in which S&P 500 companies' profits fell versus the year prior. This would be the first time this has happened since 2009 (when profits fell in Q1, Q2 and Q3).

The official numbers aren't out yet, since not every S&P 500 company has reported results for the period. However, a combination of the results from the first 63 percent that have reported, and the expected results from those companies yet to report, yields a combined earnings decline of 3.8 percent, according to FactSet. (Note that this number should rise a bit as results are released, as the average company beats expectations.)

To be sure, the low-oil-plagued energy sector, and its 74 percent earnings decline, has been a big contributor to the overall drop. But it's worth noting that six of the ten S&P 500 sectors are seeing their earnings fall compared with fourth quarter of 2014.

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The corporate results extend what some have termed an "earnings recession," based on the most common definition of an economic recession: Two sequential quarters of GDP declines.

A big problem for earnings growth is crude. Lombard Research notes that the oil bear market has boosted U.S. household income, but has largely undermined corporate earnings, especially in energy companies. "For this income to reappear as [earnings per share] growth it needs to be spent," Lombard analysts wrote in a research note recently

"Investors are nervous because the EPS responses to these income transfers are lagged; the negative EPS effects show up earlier than the gains," the firm added. "We think the recent sell-off is therefore understandable, but unwarranted."

Meanwhile, revenue looks even worse. With a 3.4 percent drop set for the fourth quarter, S&P 500 companies are set to report the fourth straight quarter of year-over-year declines in sales. That hasn't happened since the period beginning in the fourth quarter of 2008.

With all that in mind, stocks are taking it on the chin. The S&P 500 is down 8 percent since the beginning of the year, and is 12 percent off of the record highs it hit in May.

—By CNBC's Alex Rosenberg.

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