NEW YORK ( TheStreet) -- The fourth quarter 2010 earnings reporting season kicks off this week. Four times a year investors focus on the most fundamental driver of investment performance: earnings. As you can see in chart 1 below, the performance of the S&P 500 and analysts' revisions to their earnings per share (EPS) estimates are closely linked.For the S&P 500 companies as a whole, the consensus of analysts' estimates point to average earnings per share growth of 29% from one year ago. Earnings have grown at five times the pace of sales over the past year. Widening profit margins have helped earnings outpace sales growth. While the job market has been slow to improve (as evidenced by the soft employment report for December), that dark cloud presents a silver lining in the form of low labor costs for businesses and thus higher profits. On average, labor expenses make up about 70% of the cost of producing goods and services in the United States. The labor cost per unit of output has been falling at an unprecedented 4-5% pace, according to the Bureau of Labor Statistics. In addition, reduced interest and tax expenses are contributing to companies' bottom lines. Businesses have reduced and refinanced a tremendous amount of debt over the past year. In addition, they have a significant amount of tax-loss carry forwards made available to them by tax law changes that they are now using to minimize taxes. The S&P 500 EPS for the quarter may set a record as the highest fourth quarter EPS in history, and among the top three quarters in history - behind only the first two quarters of 2007. Having climbed back to near the prior peak, earnings growth is beginning to slow. We except closer-to-normal EPS growth of 10% in 2011 after 2010 resulted in a strong 39% gain over 2009. Our outlook for 2011 corporate profits is bound, in part, by continued sluggish revenue growth resulting from modest economic expansion in the developed markets, including the United States. While companies have been producing strong double-digit earnings gains on the back of single-digit revenue growth coupled with significant cost reductions over recent quarters, further gains are limited. There is little room to squeeze out additional expenses in 2011 particularly given that costs associated with materials, energy, and expanding workforces are rising.