Fears of an earnings recession are cropping up in the market as company profits are expected decline for the first time in two years.

While the possibility wouldn’t necessarily signal an economic recession to follow, it paints an important picture of flattening growth trends and a looming global slowdown.

Three experts weigh in on whether or not the markets can outlast earnings woes:

• Rene Nourse, founder and CEO of Urban Wealth Management, said that the first half of 2019 is up in the air. “Last year, we all know, was a very volatile time. Earnings were all over the place, and we now are going to have this additional impact with the federal government shutdown,” said Nourse. “So the initial impact we see with GDP growth, for example, for the fourth quarter is going to be down one-tenth of a percent. … But that’s a preliminary number. There’s going to be a lot of companies, I think, that are going to be very negatively impacted by what has happened.”

• Credit Suisse’s chief U.S. equity strategist, Jonathan Golub, said the main obstacle in the way of EPS growth is still the astronomical standards set in 2018. “Last year, you know, third quarter, you had 27.5 percent EPS,” said Golub. “The question isn’t how bad is, you know, the first or second quarter of 2019. Why were things so good, and how can you do well against those ridiculous comps? If you look, like, the two-year average number, you’re looking at 10 percent EPS.” Rather than a prelude to an economic downturn, Golub sees lower earnings growth as a correction of expectations. “What you really had was, energy was on fire, the semiconductors cycle was on fire, a lot of these internet companies were on fire, and the comps have just made it a little bit more difficult,” said Golub, “But I think everything is fine, and the market sees through what will be a downturn in earnings.”

• Kari Firestone, chairman and CEO of Aureus Asset Management, also believes there’s a light at the end of the tunnel, but that further slipping could lead to worrisome conditions. “The guidance has been reasonably good – not terrible, not great – but, I think, better than expected. If we can hold there, and have earnings grow in the 8 percent range, we can, I’d say, feel comfortable with this level of valuation,” said Firestone, “If we slip back into the low single digits, of course I think it makes it very hard to keep the market going higher.”

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