Written by Wolf Richter

Despite what you might think, there’s a difference between our financial markets and casinos in Las Vegas: casinos aren’t rigged. In a casino, the odds are officially against you. You know what they are, and you subject yourself to them – statistically speaking – to lose money … while having a blast. Wall Street on the other hand has become an ingenious hocus-pocus machine where even the most taken-for-granted and often-cited data points are systematically inflated. Yet this particular trick – one of many – is perfectly legal. It’s how it is supposed to be done – and that makes it even more insidious. [Let me explain.]

The S&P 500 companies account for about 75% of the U.S. equity market capitalization so when aggregate revenues of the S&P 500 companies rise or fall, it’s an important indicator as to what is happening in the U.S. business scene. It’s also a gauge of the global economy since many of these companies derive their revenues from around the world. So we pay close attention to it.

With 87% of the S&P 500 companies having reported first-quarter results so far, according to FactSet, revenues fell 1.6% from the first quarter 2015, when revenues had already fallen from Q1 2014. It’s the fifth quarter in a row of year-over-year revenue declines. The revenue recession continues – but it’s actually worse than that. Telecom Services, according to Wall Street data…soared 11.2% year-over-year.

FactSet cautions that the biggest – or rather, only – contributor to growth was AT&T, which reported $40.5 billion in revenues, up a dazzling 24% but, alas, AT&T is a slow-growth or no-growth behemoth so it acquires companies to grow its revenues. The last big fish it caught was DirecTV, whose revenues now adorn AT&T’s income statement. DirecTV wasn’t included in the “Telecom Services” sector before the acquisition, however, [and] without that one deal, year-over-year revenue growth in the Telecom Services sector would have been a nearly invisible 0.3%. The dazzling revenues growth of 24%? A mirage caused by M&A.