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Profit recession: This is what you need to know

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Earning recession, and 'recession recession'

The suddenly dour forecast for corporate profits in 2015 is accompanying fears that a recession will be close behind.

In fact, the two have gone pretty much hand in hand over the years, which is why a looming earnings pullback in corporate America has sparked concern on Wall Street. Since the end of World War II in 1945, each of the 10 economic recessions has been accompanied by a decline in earnings growth.

Only three times during that period did negative earnings not see a recession follow, according to Sam Stovall, chief equity strategist at S&P Capital IQ.

"While not an official profit recession, as no contraction in EPS growth is currently projected, the full-year growth estimate is getting uncomfortably close to that threshold," Stovall said in a note to clients this week. "And like the recognizable pair of Astaire and Rodgers, downward EPS growth trends and economic recessions also go hand-in-hand."

Whether this is, in fact, a profit recession is in the eye of the beholder and will be determined more fully once first-quarter earnings start rolling in. The early projections are not good.

Projections, though, are just that—estimates, which, historically speaking, generally undershoot actual growth by a substantial margin.

S&P Capital IQ expects the first quarter to show a loss of 2.92 percent for the S&P 500. Current expectations for the second quarter see a loss of 1.84 percent.