Corporate profits. They’re booming in America, on the off chance you didn’t notice.

And no, it’s not just “other income” at Alphabet and Amazon, although Anthropic was the largest contributor to S&P 500 earnings last quarter, an amusing factoid that speaks to the scope of the windfall from valuation gains on stakes in (for now private) AI companies.

I suppose I’m obligated to show you a visual that captures the Anthropic write-up effect. Here’s one, from Goldman:

Nearly two-thirds of mega-cap tech GAAP profit was down to “other income” in Q2.

But, as discussed in these pages on dozens of occasions over the course of Q2 reporting season, aggregate S&P 500 EPS growth was eye-popping even excluding those gains. Results were also quite impressive for the median company.

Bottom line (no profit pun intended): When you consider the fact that corporate America wasn’t lapping recession comps, profit growth in Q2 was anomalous.

On Monday, The Wall Street Journal ran a feature piece celebrating the boom, which both management and analysts expect to continue in perpetuity.

“From Target and J.M. Smucker to Deere, companies spanning the breadth of the US economy are ringing up heftier sales and earnings [and] rais[ing] financial outlooks for the year,” the linked article reads.

Some of the gains were attributable to tariff refunds, which accrued “primarily” as margin expansion rather than manifesting as “lower prices for shoppers,” as the Journal was polite enough to concede.

But the refunds are a sideshow. As Garmin CEO Cliff Pemble told analysts, even if you exclude the refund, his company’s “gross margin performance was impressive by any historical comparison.”

The Journal‘s piece prompted me to update my economy-wide margin charts with last week’s NIPA table refresh from the BEA. Not surprisingly, the Q2 2026 fillip stands out.

There’s the chart. 16.9% was second only to Q2 of 2021 (when the C-suite was comping an economy that was literally closed for a month and a half during the same period the prior year) in data back to 1947.

As a quick aside, the blue line in the chart shows you a proxy for the aggregate corporate interest bill as a share of profits. Although that metric ticked up in Q1 (the latest quarter for which it’s possible to do the math), it’s still more or less on the all-time lows.

For context, the figure below shows you the YoY change in the ratio of the BEA’s profits after tax series (without the inventory price change and depreciation corrections) and the GVA series.

As you can see, the increase in that proxy for aggregate net margins in Q2 compared to Q2 of 2025 was more than 275bps. That’s a lot, and to appreciate it, you have to imagine the visual stripped of recession rebound years.

All of that, despite some of the worst household sentiment and consumer confidence readings on record, and amid popular disaffection with… well, with damn near everything in America.

Suffice to say conspicuous consumption’s a form of escapism.