NEW YORK (CNN/Money) - With earnings season just underway, it looks like results for the third quarter will exceed the expectations of even Wall Street's widest-eyed bulls.

Intel, Merrill, Bank of America, General Motors -- U.S. companies are bowling over analysts' estimates as easily as Pedro Martinez can bowl over a 72-year old who looks just (really!) like David Wells. A week ago, expectations were that S&P 500 earnings would be up 15.8 percent for this year's third quarter over last year. Now somewhere north of 20 percent seems more likely.

642 802 696 322   382   582   companies reporting:     120   beat expectations:     79   met expections:     20   short expectations:     21   January 24, 2005 Fourth quarter 2004 warnings and surprises to date.

Which is nice, of course, but investors -- who always tend to be more interested in what's going to happen next than what's happening now -- might reasonably ask themselves if these good times can keep on rolling. For economists, the answer to that question is straightforward: They can't. At least not like they are now.

"You're going to see good profit growth over the next several quarters, but it's not going to be as strong as it's been of late," said Northern Trust chief U.S. economist Paul Kasriel. "Still, it will be better than a poke in the eye."

The economy went like gangbusters in the third quarter, with recent sales and trade data prompting economists to pencil in a gross domestic product growth rate north of 6 percent, and privately mulling the possibility that it might hit 7 percent. That's only happened once before in the past decade -- in the fourth quarter of 1999.

A repeat performance isn't likely. With the effects of this year's tax cuts and refinancing boom ebbing, the economy's acceleration phase is coming to an end. That's not a bad thing -- it's something that happens every time we shift from recovery into expansion -- but it's going to mean that economy is going to settle into strong, rather than stellar, growth.

That deceleration in economic growth, whatever it ends up being -- current fourth-quarter forecasts are settled in around 4 percent with further moderation expected in the first half of next year -- is going to translate pretty much directly (by definition) into slower sales growth for companies.

At the same time, as revenue growth is slowing, company costs are probably going to creep up, leaving even less cash for the bottom line. At least, economists hope that costs creep up, since higher costs are really just shorthand for job growth -- a necessary component of a sustainable economic recovery.

"The third quarter was the sweet spot for profits from an economic perspective," said Lehman Brothers chief U.S. economist Ethan Harris. "You had this pickup in growth, but you didn't have the pickup in costs. In terms of growth, this is the best quarter we're going to see."

The slowdown in profit growth may not be immediately apparent to investors, however. Economists look at growth from one quarter to the next; Wall Street looks at how growth compares to a year ago. Since earnings were still depressed (to say nothing of depressing) in the fourth quarter of last year, the percentage gains we see in fourth-quarter earnings this year should still be quite hefty.

The big difference will probably be that results won't have such an easy time buzzing past estimates. There may even be a danger that some analysts, who seem a little dumbfounded by the pickup in earnings (some have even registered their amazement that profits did so well in the, get this, challenging third-quarter economic environment), may extrapolate the third quarter's outsized growth rate into the fourth.

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But the bigger challenge will come in 2004, as year-over-year earnings comparisons get a little tougher and the economy settles into, if everything works out well, a normal growth rate. With less recourse, after all the accounting scandals, to some of the tactics they used to boost results in the past, many companies could have a hard time making profits grow as quickly as they did in the 1990s. Investors, once they see what "normal" profits growth looks like, may have a hard time digesting current stock prices.