That’s EJ Antoni, Chief Economist of Heritage, writing three days ago in the Washington Times:
Dr. Antoni is writing about corporate net income after tax. That has definitely soared. Of course, looking at manufacturing profits with inventory valuation adjustments, things look a little differently.
Figure 1: Manufacturing profits with inventory valuation adjustment fm BEA (blue), and corporate net income after tax fm Census (red), both in billions 2017$ SAAR. Deflation using PCE deflator. Source: BEA, Census, and author’s calculations.
Indeed, corporate profits after-tax have surged, particularly in Q2. However, it’s not clear to me that profits with valuation adjustments, before taxes (so registering the actual health and momentum of the sector) have changed so much. After all, just because you can expense some equipment at 100% — so increasing after-tax income — doesn’t mean underlying productivity is higher.
It’s also important to note that Q2 includes IEEPA tariff refunds…
Figure 2: Manufacturing profits with inventory valuation adjustment fm BEA (blue), corporate net income after tax fm Census (red), corporate net income ex-total tax refunds from May and June, all in billions 2017$ SAAR. Deflation using PCE deflator. Source: BEA, Census, and author’s calculations.
On the other hand, I agree that ending the US-Iran war would boost the manufacturing sector, by reducing energy costs, relaxing supply chain constraints, and reducing policy uncertainty.
“It helps explain why the manufacturing sector, which had been hemorrhaging jobs for three straight years, is now adding jobs.”
fred.stlouisfed.org/series/manemp
Notice how this liar left off the surge in manufacturing employment under Biden’s early years. How much does Heritage pay this clown to mislead?
And let’s not forget the enormous transfernof wealth from households, government, farmers, truckers, and many, many others, to oil companies:
Big Oil Companies Report Record Profits Amid High Oil Prices
“The Energy sector is reporting the highest earnings growth clip of all 11 market sectors at 128.2% Y/Y, well above the S&P 500 average at 37.9%, thanks in large part to higher oil prices amid the Middle East conflict.”
https://finance.yahoo.com/energy/articles/big-oil-companies-report-record-190000465.html
Thisbis just another case of little Antoni pretending to do economics. He left out everything but the politically useful headline.
Allow me, once again, to recommend Harry Frankfurt’sbexcellent little book:
https://press.princeton.edu/books/hardcover/9780691276786/on-bullshit
The w strongest sectors for corporate profit increases in Q2 were AI data center-related companies, and the energy sector. Neither of which are benefiting the average American consumer, and the second of which is an active stagflationary drag.
If anybody is interested, I recommend reading “Why Nations Fail.” While nobody rings a bell at the inflection point, I believe the US economy has crossed the threshold into a mainly “extractive” economy, primed to benefit the autocratic ruler and his cronies (see Putin, V.).
Soaring corporate net income is the mirror image of the record low labor share of the economy. Be guided accordingly.
Oh, and given the importance of the windfall from oil prices to profits, little Antoni is almost sure wring about and end to the war against Iran keeping the profit boom going. The economy will improve fir almost everyone but the oil industry and weapons makers (weapons makers with a long, long lag), but the profit boom, in aggregate, will collapse. That’s how much the war has skewed profits toward oil.
Pot telling the kettle to be less black:
https://www.globalbankingandfinance.com/bessent-americas-bond-salesman-cornered-japan-big-spending/
The U.S. demanded fiscal restraint from Japan as the cost for U.S. intervention. The motive for U.S. intervention was that our fiscal proflagacy requires infusions of money from places like Japan. This is hypocrisy on a grand scale.
“For months, Treasury Secretary Bessent had told Katayama and other officials privately that Japan should rein in its massive fiscal spending and that its central bank needed to raise interest rates”
Richie Rich said what? Japan’s inflation rate is less than 2%. Ours is 3.5%. Their 10-year government bond rate is 2% lower than ours. Hey Scottie – STFU!
I had this weird dream that Vanderbilt won their game today. I think the melatonin is triggering weird dreams again. Otherworldly
Here’s a good primer on the yen carry trade, which is a central motivation for the intervention and a substantial part of international financial flows, bothe when carry trades are put on, and when they’re closed:
https://archive.is/BBtsf#selection-1259.0-1259.59
Off topic – So, while the U.S. dithers, there is a huge diplomatic scramble underway elsewhere in the world to resolve wars and their collateral damages. I won’t engage in my usual link-fest, ’cause allergies have me working at half capacity, but here’s what seems to be happening…
Iran’s foreign minister is in Beijing ahead of Xi’s meeting with our toddler-in-chief. That very fact – Tehran before the U.S. – speaks volumes. Beijing is waving our failure around, making a point of giving Tehran precedence, right before meeting with the toddler. Vicious.
While in Beijing, Iran’s FM called high-ranking Turkish and Pakistani officials to discuss “regional issues”. Again, the Beijing link is a big deal: “I was just talking with my good friend, the Chinese FM, and he said…” You get the idea.
What do you figure the toddler-in-chief is going to get out of Xi when they meet? ‘Cause last time he got nothing.
Meanwhile, Saudi Arabia has been in touch with China, asking China to ask Iran to ask the Houthis to lighten up. While Iran’s FM is in Beijing.
Saudi Arabia, Pakistan and Turkey are the Mecca alliance countries, so there’s no coincident that they’re the ones involved in this Iran-does-China thing. By the way, remember when Pakistan was the mediator between Iran and the U.S.? That’s out the window now that Pakistan is in a mutual defense pact with Saudi Arabia.
Anyhow, we started a war that has harmed just about every country other than Russia, and now we’re dithering. Dithering very publicly. So now China is the 800 pound diplomatic gorilla. We handed China that role when we abandoned it. Jeebus F#$%^& C#$%&!!! We had it! We had the juice! We could get things done just about anywhere with a phone call, but no more. Oh, no. Now, if you want something done that doesn’t involve killing brown people, you call China. The Napping Nincompoop and Whiskey Pete and Little Marco have frittered away U.S. soft power, and for what? So inflation can run wild and oil companies can gouge everybody and Israel can exterminate everyone in the Ghettos. Great.
Heck, Canada is paddling toward Europe as we speak, ’cause crusing around with us is sooooo last century. Carney is on his way to being the most influential Canadian, and Canadian PM, of the first half of this century, and he has been in office only a year and a half. Decoupling from the U.S. is going to be his legacy, and will very likely be remembered as a great accomplishment.
I got a little off track. The point is, the rest of the world is working toward a solution, sponsored by China. Our parochial press is missing most of it. Our government has sidelined itself. Maybe nothing will come of it, but things are hopping everywhere but Washington.
Trump’s last friend is Vlad. When he is overthrown……
Indeed we have gone from the country that solved problems to the country that create them. China has gone in the opposite direction – and the opinion pools show it. The world trust the president of China more than ours to “do the right thing”.
https://paulkrugman.substack.com/p/fear-strikes-out
Seems we’re not the only ones who think we’ve given away the game to China:
https://foreignpolicy.com/2026/09/17/china-iran-trump-debacle-foreign-policy-war-trade-sanctions/
The word is out that the IMF dropped Richardo Reis at the last minute before a planned announcement as their new chief economist over critical remarks he had made about Trump’s tariff policies. Reis had warned last year that the burden of the “liberation day” tariffs would fall on US consumers.
He was replaced with Silvana Tenreyro who was less vocal about tariffs, but wasn’t EJ available?
Recall that Kevin Hassett said New York Federal Reserve economists should be “disciplined” for a report saying that American businesses and consumers were shouldering most of the costs from US tariffs.
As some point out the cowardice of the White House Correspondents Association in the wake of Trump’s censorship of reporters, where are economists?
Our President explains trade economics (direct quote):
“If we buy $2 billion worth of bananas from Brazil, we’re actually losing $2 billion. So if we stop eating bananas, we actually save $2 billion.”
Hard to believe such a business genius had to declare bankruptcy four times.
The Orange moron has gone Bananas !!!
Congressional testimony from Treasury Secretary Bessent about Trump’s proposed $5,000 checks to every adult in the US — approximately $1.3 trillion.
Rep. Vargas: Does that increase the deficit or does it increase the debt?
Sec. Bessent: I believe that there are ways to do it without increasing the debt or deficit.
Rep. Vargas: Why don’t you go ahead and tell us then because it doesn’t seem like that’s been the case so far?
Sec. Bessent: That is in process right now.
Rep. Vargas: So it’s somehow mysteriously or magically going to occur. You can’t tell us, you can’t give us a name.
Sec. Bessent: I’m not ready to discuss at present, but at Treasury we’ve been working on it for quite a while.
Presumably they have been working in parallel with their “concepts of a plan” for healthcare reform, due in the next two weeks for the last 10 years.
You know, there’s a high probability that some global economic crisis will occur in the next two years and the rest of the world’s serious central bankers and finance ministers will look to the US and see this dishonest and disreputable clown.
He actually thinks if we call this a dividend, it will not increase the debt. Merton Miller must be falling on the floor laughing.
I guess he couldn’t say: “this is an absurd election year gimmick that Trump is throwing out as a desperate Hail Mary pass to avoid his unpopularity dragging GOP out of power in the house and senate” and/or “don’t worry its not really going to happen, so we don’t need to make plans for it”
Ivan: “don’t worry its not really going to happen, so we don’t need to make plans for it”
That’s a pretty safe bet. If Republicans lose, Trump has already said he won’t do it. And if Republicans win, Trump will have his last two years guaranteed so why would he bother. Trump never makes good on his promises — only losers do that.