Data from Yardeni Research and LSEG shows that S&P 500 forward earnings grew by 38.8% year-over-year, and the real increase after adjusting for inflation was still 32.2%, the highest level in a non-recession recovery phase since 1980. Previously, only 2010 and 2021 saw growth close to 40%, but both occurred during low-base rebounds following economic recessions. This earnings growth is not from a recession recovery, reflecting continued strong earnings expectations for US listed companies. Meanwhile, the S&P 500 forward price-to-earnings ratio has fallen from approximately 23 times to below 19 times this year, with earnings growth outpacing stock price performance, driving down valuations. However, forward earnings represent analysts' rolling forecasts for the next 12 months, not realized profits, and whether upward revisions can be sustained remains a key focus for the market.
