An earnings recession is now expected after the forecast after fourth-quarter projections send expectations from a gain of more than 5% to a decline. What that means, is that the holiday season and consumer spending is no longer expected to pull corporate earnings out of a recession that has lasted the entire year.

Economists have often said that the only thing propping up this precarious economy is the American consumer and their willingness to take on more debt to purchase things. But that looks to be coming to an end, as earnings in the S&P 500 index are now projected to decline 1.51% in the fourth quarter from the year before, according to a FactSet computation of analysts’ average forecasts for individual companies.

An earnings recession is defined as two quarters or more of consecutive year-over-year declines, and earnings for S&P 500 components dipped in the first two quarters of 2019 and are all but certain to do so again in the third quarter — with nearly 95% of calendar third-quarter reports posted, earnings have dropped 2.34%, the biggest decline so far this year. –Market Watch

Three-fourths (75%) of earnings recessions since World War II have morphed into economic recessions, said CFRA Chief Investment Strategist Sam Stovall, who told Market Watch that he has been “scratching his head” trying to reconcile analyst pessimism around earnings with continued stock-market rallies.

This could be the result of “trade deal fears,” in Stovall’s opinion. “Until details of the deal are revealed, along with the prospects for continued conversations, EPS estimates are likely to undershoot potential,” he wrote in a recent note to clients.

Amazon.com Inc., for example, is typically a big winner in holiday sales. However, it is expected to post an earnings decline of 31.3% in the fourth quarter, after earlier projections called for an 8.3% advance. The e-commerce giant ramped up spending this year to cut its delivery times to Prime customers in half to one day, and all retailers face a shortened shopping season this year with Thanksgiving falling later in the calendar month.

Stovall said that a trade resolution would offer some relief to multinational sectors, including industrials, materials, and technology, which also happen to be cyclical industries. “Maybe even energy might be able to get out of its own way,” he said.