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The overall earnings picture started improving in early July as big parts of the U.S. economy have started coming out of the pandemic-driven lockdown. We saw this improvement in the revisions trend, with earnings estimates steadily going up. Earnings growth in Q3 was still negative, but the decline was significantly smaller relative to what we had seen in Q2, which turned out to be the bottom.

This favorable revisions trend appears to have leveled off to some extent in recent weeks, likely reflecting the moderating effect of the fall and winter infection surge that has been showing up in recent economic readings. But with the vaccination exercise already underway and expected to gather pace in 2021, it is reasonable to envision the economic and earnings pictures resuming the earlier positive trend.

The consensus expectation is for total S&P 500 earnings to decline -11% in Q4 from the same period last year on essentially flat revenues. This would follow the -7% decline in Q3 and -32.2% decline in Q2 when economic and business activities came to a halt as a result of the pandemic driven lockdowns.

The chart below shows how 2020 Q4 estimates have evolved over the last few months.

The Q4 earnings season will really get going when the big banks come out with results on January 15^th. The wide majority of companies have fiscal quarters that correspond with the calendar quarters, which is December 31^st for Q4.

But there are almost two dozen S&P 500 members that have fiscal quarters that ended in November and 9 such companies, including FedEx (FDX) and Oracle (ORCL) have reported their fiscal November-quarter results recent days. We and other data aggregators club the results from these 9 index members as part of the Q4 tally. We have another three S&P 500 members on deck to report fiscal November-quarter results this week, including Cintas (CTAS), CarMax (KMX) and Paycheck (PAYX).

Looked at this way, we will have counted almost two dozen such Q4 results before JPMorgan (JPM) reports its quarterly results on January 15^th.

The table below shows summary expectations for Q4, contrasted with what was actually achieved in 2020 Q3.

The chart below takes a big-picture view of the quarters, showing Q4 earnings (green bars) and revenue (Orange bars) growth in the context of what was actually achieved in the last few quarters and what is expected in the coming periods.

The chart below shows quarterly earnings totals or quarterly aggregate net income, instead of year-over-year growth rates. This gives us a better appreciation of the pandemic’s earnings impact.

The chart below presents the big-picture view on an annual basis. As you can see below, 2020 earnings and revenues are expected to be down -16.9% and -3.9%, respectively. But growth resumes in the New Year, with easy comparisons providing a big help.

For an in-depth look at the overall earnings picture and expectations for the coming quarters, please check out our weekly Earnings Trends report Looking at Q4 and 2021 Earnings.