Third-quarter earnings in general may be beating analyst estimates, but those expectations have come down from a much higher starting point. Comparing actual earnings to the Q3 estimates that existed a year ago makes the results look terribly disappointing.
This pattern of earnings beating much-weaker estimates isn't only true for this quarter, but basically every quarter going back several years.
"We talk about it all the time here," said David Nelson, chief strategist at Belpointe Asset Management. "Analysts tend to have bullish estimates on their companies, but are forced back to reality as the year unfolds. It's also a component of the economy and data coming in worse then expected."
"It works in reverse as well," Nelson said. "Coming out of the recession analysts I'm sure were forced to up their estimates as the year went on."
This isn't only about company earnings, but the broader economy, too. At the beginning of the year, economists expected 2 to 3 percent GDP growth, and for the first half of 2016 the economy barely passed 1 percent.