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Shrinkage: Analysts predict major earnings bummer

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As the first quarter ends, analyst estimates for Q1 earnings continue to slide. At this point, analysts expect to see year-over-year earnings growth that is not just anemic, but actually negative.

If those expectations play out, then it will be only the second quarter of negative earnings growth for the since 2009.

At the end of 2013, analysts predicted that S&P 500 companies would show earnings growth of 4.4 percent in the first quarter compared with the year prior. Those expectations have fallen 4 percent over the course of the quarter, so that a decline of 0.4 percent is now anticipated, according to FactSet.

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The last time the S&P 500 earnings growth rate went negative was in the third quarter of 2012, when earnings dropped by 1.0 percent. Before that, the S&P 500 had not shown negative growth since the fourth quarter of 2009.

The good news is that just as it's not unusual to see earnings estimates drop over the course of a quarter (in fact, over the past five years, the bottom-up earnings per share has fallen by 4.4 percent during the average quarter), it's also typical to see the final analyst estimates to undershoot expectations.

"Usually we finish somewhere between where estimates are at the start of the quarter and where they are at the end—somewhere in that range," explained FactSet senior earnings analyst John Butters. "That's generally how this works. So the odds are that enough companies will beat their estimates that we get back to positive."

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In fact, at this time in 2013, analysts also expected to see first-quarter earnings growth come in negative. But as companies beat estimates, the S&P 500 eventually logged earnings growth of 3.8 percent in Q1 2013. That's why Butters says that it is unlikely that we actually see negative growth for Q1 2014.

After all, about 70 percent of companies tend to beat their earnings estimates.

Still, he told CNBC.com that we can expect the actual growth rate to be muted, given that "this time around, we're starting with a lower base."

On the revenue side, the estimated growth rate is 2.7 percent.