Annualized inflation YTD for 2012 is 1.8% (1.2% for the 1st 8 months through August) ... not 0.8% and 1.2% annualized as shown in the original note.  This doesn't cause a significant change in the results of the analysis, but it does decrease the real earnings to date for the S&P 500 for 2012 to a negative ...

S&P 500 Price has increased 14.8% YTD (through 9/14/12).  Average S&P 500 P/E over the period is pretty much flat at Price = 15.56 x Earnings.  Thus the S&P 500 earnings are up YTD by less than 1% (~ 0.95%).   On an average monthly compound basis this translates to 0.01% per month ...

The following data comes from this source.  It shows annual earnings per share for the S&P 500 in March 2012 constant dollars from 1881 thru 3Q 2011.    You can puruse the charts below and ponder recent market behavior (which is literally "off the charts" in historical perspective).  I'll only comment ...

An excerpt from this news article today (emphasis below is mine):

So far, with 23 percent of S&P 500 companies having reported results, more than four-fifths have beaten expectations, topping consensus forecasts with an average surprise factor of 8.8 percent. Profit growth in this quarter has been up 6.2 ...