As Wall Street analysts try to solve the puzzle of the economy's prospects for recovery from the recession, one big piece - a revival of corporate profits - is still conspicuously missing.
Ever since the stock market began to rally last fall en route to record highs, it has seemed to be forecasting an impending improvement in businesses' bottom lines.But so far few signs have appeared of any end to the earnings slump that set in more than two years ago.
Now, most projections of any dramatic profit upswing have been pushed back to 1992.
With the uneven progress other economic indicators have been making lately, some analysts are wondering whether those forecasts will prove as overly optimistic as so many others that preceded them.
"The big question that has developed over the summer is whether the erratic economy will mean disappointing earnings for the rest of this year and all of 1992," says Byron Wien, an analyst at Morgan Stanley & Co.
"We still remain optimistic that there will be a major profit recovery next year," Wien declares. If some of his colleagues' forecasts prove correct, earnings could show gains of as much as 25 percent to 35 percent or more.
But a good many other observers aren't so sure.
"The emerging economic recovery is one of the more anemic recoveries on record," say analysts at Wright Investors' Service of Bridgeport, Conn. "The interest-rate-sensitive sectors of the economy have failed to respond to the Federal Reserve's efforts at monetary ease over the past year.
"Even if the Fed were to adopt a more aggressive monetary policy, it may take six to nine months before the economy feels the effects."
Most assessments of the outlook would brighten if long-term interest rates, which have come down only grudgingly this year, were to keep declining.
"A shift down in the trading range for U.S. bond yields would square with lower inflation and lower short rates," says Robert Barbera at Shearson Lehman Brothers Inc.
"Lower long rates would give housing a second strong push. A rebound for housing and the need to rebuild inventories are the stuff of snappy recoveries. That is how recessions are resolved."
Such hopes seemed to be muted as stock-market investors returned from the Labor Day holiday in the past week.
The Dow Jones average of 30 industrials closed Friday at 3,011.63, down 31.97 points from the week before.
The New York Stock Exchange composite index dropped 3.18 to 213.51; the NASDAQ composite index for the over-the-counter market fell 8.75 to 516.94, and the American Stock Exchange market value index was down 2.43 at 369.70.
Wien points out that stocks' explosive rise during the 1980s came during a period of sluggish profit growth.
Price-earnings ratios grew much more than earnings, he says, thanks in large measure to falling interest rates.
"The bull market of the 1980s was largely fed by multiple expansion. This is not likely to be repeated during the current decade," Wien argues.