Wall Street earnings, predicted vs real

From Steve Benen:

Via Paul Kedrosky, here's a McKinsey chart comparing projections of corporate earnings by Wall Street analyst with the actual results. As you can see, the analysts relentlessly overestimate earnings.

Actually, what I find most interesting about this chart isn't the overestimation — though that's fascinating — but the remarkable steadiness of their earnings projections. For 25 years, with the exception of a few years starting in the late 90s, through good times and bad, consensus earnings for the S&P 500 have been right around 12-13%. No matter what's going on in the broader economy, Wall Street always thinks earning will be at least 12% or higher. Coincidentally, I'm sure, this is also the direction of error most likely to get their clients to churn stocks.