Earnings forecasts always get cut, but 2016 has been particularly terrible

Earnings forecasts are always getting cut.

Over the last 20 years, annual S&P 500 earnings expectations have, on average, declined about 12% from the time estimates are first drawn up about two years in advance to when earnings are reported.

But 2016 has been a particularly grim year.

Expectations for 2016's earnings are already down about 16% from when estimates were first made and we still have over half the year left.

If the downward trend holds, earnings this year could be truly terrible. On the other hand, earnings expectations could be near a trough.

In a recent note, Strategas Research Partners writes that recent upticks in fiscal spending and improvements in PMI surveys indicate the potential for earnings in the second quarter to rebound, which would likely drag higher full-year expectations.

The firm writes, however, that, "The durability of this 're-acceleration' remains in question..."

Strategas Research Partners