Just a few weeks ago FactSet was reporting analysts’ estimates for Q1 2016 EPS were looking to be a 6.9% decline year-over-year. Their latest update now suggests -8.0%, as the deterioration in earnings outlook is becoming the most significant part of the trend.

During the first two months of Q1 2016, analysts lowered earnings estimates for companies in the S&P 500 for the quarter. The Q1 bottom-up EPS estimate (which is an aggregation of the estimates for all the companies in the index) dropped by 8.4% (to $26.69 from $29.13) during this period. How significant is an 8.4% decline in the bottom-up EPS estimate during the first two months of a quarter? How does this decrease compare to recent quarters?

During the past year (4 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 3.8%. During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.8%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 3.6%. Thus, the decline in the bottom-up EPS estimate recorded during the first two months of the first quarter was larger than the 1-year, 5-year, and 10-year averages.

  In fact, this was the largest percentage decline in the bottom-up EPS estimate over the first two months of a quarter since Q1 2009 (-24.0%).

That suggests both the seriousness of the trend and confirmation of what we see in economic accounts well away from the BLS employment figures. In other words, the “earnings recession” is quite real and it is getting broader and deeper still. In many ways it is already worse than even all that spelled out above as those EPS estimates are operating earnings stripped of the full measure of GAAP charges. S&P, however, provides useful contrast if only limited to the S&P 500 index (meaning the EPS estimates presented below are not translatable to the FactSet estimates noted above). As of March 3, 2016, with 97.8% of the 500 companies having reported for Q4 2015, the index EPS for “as reported earnings” stands at just $18.63. That is the lowest quarterly EPS since Q1 2010. It is 18.4% less than the $22.83 reported from Q4 2014.