Corporate profits for U.S. companies in the first quarter are expected to be a dud in many cases, market analysts said.
“It is the lowest quarter of growth we have seen since the third quarter of 2009,” said Christine Short, senior manager for Standard & Poor’s Global Markets Intelligence.
Standard & Poor’s closely watched Capital IQ Survey has predicted profits will grow 0.93 percent January through March compared with the same quarter of 2011.
A year earlier, a comparison of first quarters showed growth of 19.68 percent.
The comparison may be considered unfair, given the 19.68 percent spike was a jump out of a deep recessionary trough. This year’s comparison to 2011 is not just lower, it is more normal.
This year, “You still have growth, but it is at a slower pace,” said Lawrence Creatura, a portfolio manager at Federated Investors.
Other market fundamentals are also ganging up on earnings. Some companies that laid off workers in the recession are beginning to hire some workers back, adding that expense to their books. Fuel costs have risen sharply in the past three months with gasoline prices up more than 70 cents per gallon since late December.
The debt crisis in Europe and the economic slowdown in China are contributing factors. The U.S. trade gap grew from $50.4 billion to $22.6 billion in January, working against U.S. corporate profits.
The first quarter’s corporate reporting season gets under way next week. Traditionally, Alcoa Inc. is the first major corporation to file a report. It is also considered a bellwether for the rest of the corporate-reporting season, given aluminum’s broad affect on manufacturing.