US corporate profits rise nearly 10%, driving record profit margins not seen since the 1940s

American corporations just posted their best quarter in a very long time. Profits from current production jumped $400.9 billion in Q2 2026, according to Bureau of Economic Analysis data released on August 26. That’s more than five times the $74.4 billion gain from the prior quarter.

The result: after-tax profits as a share of gross value added reached 19.4%, up from 18.2% in Q1. That’s the highest level on record since the data series began in the 1940s.

The numbers behind the surge

Total corporate profits, adjusted for inventory valuation and capital consumption, hit $4,827 billion on a seasonally adjusted annual rate basis in Q2. That’s roughly 9% higher than the $4,426 billion recorded in Q1.

The BEA data landed alongside a broader picture of economic resilience. Real GDP grew at a 1.5% annualized rate in the second estimate. Nonresidential fixed investment expanded at an 8.5% annualized pace.

Richard Moody, chief economist at Regions Financial, connected the dots directly.

“Profit growth is freeing up cash that is helping support business capital spending, with cap-ex growth extending beyond AI related investment.”

Why margins are so wide

For the S&P 500 specifically, the earnings season aligned with this government data told a similar story. Blended earnings growth hit approximately 50% year-over-year, and net profit margins reached multi-year highs across the index.

What this means for markets and the economy

The 1.5% GDP growth rate offers a subtle warning. An economy growing at a modest pace while corporate profits surge nearly 10% in a single quarter suggests the gains are coming more from margin expansion than from volume growth.

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