Since July began, analysts at the largest U.S. banks have pared $34 billion off their expectations for third-quarter growth among American corporations listed on the Standard & Poor’s 500 index, FactSet reported.

That would make the quarter just closed the poorest for profits since the third quarter of 2020, during the thick of the COVID War.

Analysts now say they expect earnings per share to grow by 2.6 percent instead of the 9.8 percent they were forecasting at the beginning of July.

Excluding S&P-listed energy corporations, which have seen windfall revenues this year, the analysts forecast not a growth in earnings but a 3.8-percent decline.

Even a 2.6-percent growth represents a loss in practical terms, with U.S. inflation running above 8 percent.

Rising interest rates, inflation, and a slowing global economy have left investors skittish about the prospects for large, international businesses, the Financial Times reported.

The dollar’s near-record strength also pinches earnings. An expensive dollar makes exports more expensive and about a third of revenue for S&P companies comes from overseas, according to the FT.

The S&P already has lost about 20 percent of its value this year.

“There are some positives in the mix, but there’s little incentive for companies to paint a particularly optimistic outlook when the market is going to discount that anyway,” Chris Shipley, chief North America investment strategist for Northern Trust Asset Management, told the FT.

The U.S. Federal Reserve has signaled a steady rise in interest rates into next year. Higher rates have doubled borrowing costs this year in many areas and will cause consumers to cut back spending, the FT said.

Even with $34 billion sliced off earnings estimates, those estimates “are still higher than what I would rationally expect,” CEO Omar Aguilar at Schwab AM said in an FT interview.

“They don’t necessarily have to come down dramatically,” he added, “but there’s a high probability that if the Fed is successful in its journey to destroy demand, then that will be reflected in earnings numbers in the first half of next year.”

Some market-watchers have said that as earnings decrease, companies that have done a better job of weathering recent economic turmoil have a chance to distinguish themselves from their less-well-managed peers.

TREND FORECAST: The analysts agree with our Top 2022 Trend of Dragflation: economic activity is declining while prices continue to rise, squeezing corporate revenues and profits from both directions.