Profits for S&P 500-listed companies are expected to fall nearly 3% this quarter.

That represents a significant slowdown from last year's rapid growth in corporate earnings.

A report out this week from Oxford Economics calls those profit woes a "bad omen" for the economy.

Concerns are growing that corporate America's bottom lines have topped out. If so, that could be among the biggest signs that the U.S. economy is faltering and potentially headed for recession.

President Donald Trump has downplayed such fears, saying on Wednesday that further tax cuts are unnecessary because the economy remains strong. That was a reversal from his earlier statements this week that he was considering cuts to payroll and capital gains taxes in order to boost economic growth.

Although second-quarter profits for S&P 500-listed companies exceeded analyst expectations, coming in either flat or rising slightly, profit forecasts for the July-to-September period look much bleaker. Analysts expect profits to fall 2.6% in the period. That would be a dramatic change from a year ago, when S&P 500 profits in the third quarter rose 27% from the previous year.

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Falling corporate profitability is considered a strong, though not infallible, indicator of an approaching recession. For example, S&P 500 profits fell for three quarters in a row starting in the fourth quarter of 2015 — no recession has followed, at least not yet.

Yet other measures of company earnings also point to rough waters ahead. Drawing on what's known as National Income and Product Accounts data (or NIPA, which the U.S. Department of Commerce uses to calculate the country's gross national product), Oxford Economics found that corporate profits in the final quarter of 2018 and the first three months of this year sank — the first back-to-back quarterly decline in two years. Corporate profit margins are also narrowing, the research firm found, which can also augur recession.

Meanwhile, a closely watched gauge of business conditions released on Thursday — the IHS Markit purchasing managers' index — suggests that corporations are reining in spending because of slowing growth and concerns about the global economic outlook.

"Business expectations for the year ahead became more gloomy in August and remain the lowest since comparable data were first available in 2012," Tim Moore, economics associate director at IHS Markit, said in a research note. "The continued slide in corporate growth projections suggests that firms may exert greater caution in relation to spending, investment and staff hiring during the coming months."

Much of the U.S. economy is driven by consumer spending, and that remains strong. But lower corporate profits can hurt business spending, investment and hiring, which would dent consumer spending. On top of that, about 40% of the profits of S&P 500 companies come from overseas, which is also showing signs of weakening.

Is the "Trump bump" fake news?

Oxford comes to another conclusion that could bode ill for the economy: The firm's NIPA analysis found that the so-called Trump bump — the mixture of tax cuts and deregulation that the White House has touted as boosting the economy in 2017 and 2018 —is largely an illusion.

In fact, according to recent revisions of NIPA data, corporate profits peaked back in late 2014, and not in late 2018, as previously thought. Since 2014, corporate profits have mostly been flat. Not even the hefty corporate tax cuts provided much of a boost, according to the research firm.

Whether there was a Trump bump may seem moot at this point. But Oxford senior economist Lydia Boussour, the author of the report, said it may matter a lot when it comes to recession forecasting. Here's why: Recessions have typically followed downturns in NIPA data, but with a lag, sometimes as long as four years.

In other words, if corporate profits turned down in 2018, then the earnings bonanzas may continue and there is little to worry about. But if the real earnings peak came in 2014, then a recession is long overdue.

The government will report its latest NIPA corporate profit data next week. If the number is a downer again, recession deniers like Mr. Trump will have a harder and harder time holding their ground.