Earnings Outlook in U.S. Dims as Global Economy Slows The prolonged boom in American corporate profits, which has far outpaced the gains in the broader economy since the end of the last recession, is faltering. As the third quarter draws to a close, the biggest American companies are expected to post their first quarterly decline in earnings since 2009, as sales growth ebbs. Warnings from bellwether international companies have surged in recent weeks, with FedEx, tech giants like Intel and Burberry, the British luxury retailer, all citing weakness in global demand. The estimated drop in profits comes as hiring in the United States has slowed in recent months, and removes what had been an economic bright spot in an otherwise cloudy picture. It also reinforces fears that the economy is running out of steam. On Thursday, the Federal Reserve announced it would begin another round of stimulus efforts to push interest rates down and kick-start growth. A day later, the government reported that industrial production in August fell 1.2 percent, the biggest monthly contraction since March 2009. After reducing spending and eliminating jobs during the recession, American companies reaped huge gains by keeping expenses down and holding off on aggressively hiring new workers as growth slowly returned. Strong profits have also propelled the stock market higher, reassuring investors who have seen other assets, like real estate, decline in value over the same period. But while the Standard & Poor's 500-stock index on Friday notched its highest close since 2007 in the wake of the Fed's announcement, the cycle of steady earnings increases appears to have run its course. "A lot of the profit gain you had in the last few years was a bounce from the recession and a result of very aggressive cost-cutting," said Ethan Harris, chief United States economist at Bank of America Merrill Lynch. Those factors are going to be very hard to replicate. The causes of the decline are many. In addition to the anemic economy in the United States, much of Europe has fallen into recession while growth in China, once white-hot, has slowed. There is also the looming prospect of automatic tax increases and spending cuts in Washington, which has caused companies to sit on the sidelines. The expected decline in profits has yet to set off big layoffs. But it is another factor that is inhibiting hiring and keeping unemployment above the politically-sensitive level of 8 percent, executives and economists say. It could also increase pressure for more corporate belt-tightening in the future. Even as profit expectations tumble, sentiment among corporate executives is also becoming more gloomy. Just over half of managers at North American companies now expect production levels to increase in the next 12 months, down from 64 percent in the second quarter, according to a survey by CEB, a member-based advisory firm. In the same survey, the percentage of executives who expect to hire more workers fell to 34 percent from 41 percent last quarter. "We're sort of like in this limbo environment," said Gregory T. Swienton, chief executive of Ryder, the truck rental and transportation company. I'd love to be able to say we're hiring but there is no natural big growth that would require hiring. The slowdown overseas is beginning to cut into profits at both large and small companies, many of which had benefited in the last few years from heightened demand abroad even as growth in the United States slowed. At Eastman Machine in Buffalo, orders from China and Europe are below last year's levels, said Robert Stevenson, the company's chief executive. While business has held up better domestically, and Mr. Stevenson says he is optimistic about the future of his family-owned company over the long haul, "in the short-term, we feel like we are walking on a tightrope." Wall Street analysts expect earnings for the typical company in the S. & P. 500 to decline 2.2 percent in the third quarter of 2012 from the same period a year ago, according to Thomson Reuters, the first annual drop since the third quarter of 2009. Earnings are expected to be down 3 percent from the second quarter of 2012.