Judging from the way that companies are celebrating the earnings season, you'd think that the economy was back to firing on all cylinders. Yet in reality, the only thing that many companies are doing is beating analyst estimates that already reflected the huge contraction in the economy-- and if you're a long-term investor, you shouldn't necessarily jump for joy.

Jumping a three-inch hurdle
The disparity between beating estimates and showing real earnings growthis especially clear in this quarter's results. According to Bloomberg, over 85% of the companies that reported their earnings last week beat analyst estimates. Yet on average, the companies saw their earnings shrink by 19% from last year's levels, marking two full years of earnings declines. Those figures are roughly in line with how well the entire earnings season has gone so far. Here are some examples:

Stock

2009 Q3 Estimate

Actual Reported Earnings

Change from Last Year's Earnings

Caterpillar (NYSE: CAT)

0.06

0.64

(54%) Continued...