What's going on?

US companies are about to start reporting on how they performed last quarter, and investors might find the situation pretty familiar…

What does this mean?

Analysts are expecting American companies to reveal a 9% fall in average profits compared to the same time the year before. That would make it the third-biggest quarterly drop in the last ten years � trailing only behind the first and second quarters of 2020.

But here�s the thing: analysts previously argued that profits in the third quarter of 2020 would collapse by 21% on average. And in reality, they only slipped by 6%. So while a 9% drop might not sound ideal, the experts� outlook could�ve been a lot bleaker � and as recently as a couple of months ago, it was.

Why should I care?

For markets: Sorry, not sorry.

There are three sectors in particular where company earnings are expected to see a bump: consumer staples and healthcare companies � whose products and services are invaluable come rain or shine � and tech firms, which have benefited from pandemic-driven trends. If only the energy sector were in the same boat: a slew of new stay-at-home orders wrecked demand for oil all over again, and it�s expected to show on its companies� bottom lines.

The bigger picture: Stay positive.

At least analysts are feeling pretty chipper about 2021: they reckon US company earnings will grow by 22% on average this year � the biggest jump in a decade (tweet this). And given that they�re expected to have fallen by around 13% in 2020, companies should on average recoup their losses by the end of this year. As for which of them will boost earnings the most: analysts are backing this year�s hardest-hit companies � think industrials and, yep, energy companies � to come out on top.