More reasons behind the profit boom of 2026

We know that as prices went up after war broke out in Iran last February, so did profits and we recently got more evidence of that with a report from the Census Bureau on profits in manufacturing. In particular, check out this table.

So post-tax (seasonally adjusted) income for manufacturers went up by nearly 22% in 3 months, and nearly 647 in 12 months.

Part of that reason is the signing of Trump/GOP Tax Scam 2.0 in July 2025 and its related incentives. But another part is in that “cents per dollar of sales” – aka profit margins. Margins are up nearly 40% on a non-seasonally adjusted basis and over 42% on a seasonally-adjusted one.

Not surprisingly, much of the increase in manufacturing profit comes oil and gas, whose prices started rising after we started bombing Iran in late February 2026.

After-tax profits, petroleum and coal products, US
Q1 2026 $13.15 billion
Q2 2026 $54.14 billion (+311.7%)

But it’s not only fossil fuel companies making more in profit. Durable manufacturing also had a big boost in the Spring and early Summer.

After-tax profits, durable manufacturing, US
Q1 2026 $204.42 billion
Q2 2026 $254.65 billion (+24.6%)

Out of that $50 billion+ in added profits, around $8.5 billion of that was in aerospace products and parts, which is a volatile category of big-ticket items that don’t necessarily show a trend. But post-tax profits in the machinery sectors more than doubled between Q1 and Q2, up by more than $12.4 billion. We also saw more than $3.0 billion in added Q2 profit for primary metals (+36.8%), and nonmetallic mineral products had its profits go up by more than 158%, from $2.95 billion to $7.63 billion.

(I’m not going to say these companies are pocketing the difference from the end of Trump’s tariffs and not passing those savings onto customers and/or workers. But if you want to…).

Computers and electronic equipment make up the largest of US durable manufacturer profits measured, but only made up slightly more than $11 billion of the $50.2 billion in the added profits of Q2 2026. But that may be because that tech equipment sector already had its profit boom in 2025 and early 2026.

After-tax profits, computer and electronic products, US
Q2 2025 $68.69 billion
Q2 2026 $156.03 billion (+127.2%)

And yet information technologies have been laying people off in large amounts for the last couple of years. Yes, that’s not exactly hardware, but it’s also not unrelated, since you oten need IT services to run the items on this equipment, so that’s an interesting cross-current.

Manufacturers aren’t the only businesses who saw a jump in profits in Q2. It also looks like retailers had a big increase as well.

Seasonally adjusted after-tax profits of U.S. retail corporations with assets of $50 million and over totaled $112.3 billion, up $45.1 (±0.5) billion from the $67.2 billion recorded in the first quarter of 2026, and up $51.7 (±0.9) billion from the $60.6 billion recorded in the second quarter of 2025.

Seasonally adjusted sales for the quarter totaled $1,171.1 billion, up $28.5 (±5.0) billion from the $1,142.6 billion recorded in the first quarter of 2026, and up $88.7 (±10.5) billion from the $1,082.4 billion recorded in the second quarter of 2025.

So profits were up nearly $17 billion more than sales were at these large retailers. Hmmm….

And if you look at the non-seasonally adjusted figures, the difference in those retail profits is due to a $36.4 billion increase in Q2 in what’s ID’d as non-operating income.

So what is an example of this type of non-operating income? Here’s what Investopedia has to say about it.

If a retail store invests $10,000 in the stock market and earns 5% in a month, the $500 earned would be non-operating income. When a person sets out to analyze this retail company, the $500 would be classified as nonoperating, or non-recurring, earnings because it can't be relied on as continuous income over the long term.

Alternatively, if a technology company sells or spins off one of its divisions for $400 million in cash and stock, the proceeds from the sale are considered non-operating income. If the technology company earns $1 billion in income in a year, it's easy to see that the additional $400 million will increase company earnings by 40%.

To an investor, a sharp bump in earnings like this makes the company look like a very attractive investment. However, since the sale cannot be replicated or duplicated, it can't be considered recurring operating income and should be removed from performance analysis.

So this appears to be paper gains and accounting tricks by major retailers, more than profiteering. And it’s not sustainable in the long-term, but in a corporate environment of “make number go up”, boardrooms don’t really care about that.

And given that these companies rely so heavily on these large profit numbers to keep these stocks pumped up, I can’t see them cutting their inflated prices any time soon. And they clearly haven’t passed these higher profits onto workers, as we are in a multi-year low for average hourly wages on a year-over-year basis.

More proof that the economy in Summer 2026 was a nice situation if you’re a CEO or if you’re someone who lives off of wealth. But not so good if you’re a person with a real job that has to buy stuff and pay bills.