Investors hail the U.S. rally as earnings‑driven, citing a 28 % profit jump last quarter—growth typical of a post‑crisis bounce. They contrast today’s high‑flyers, the Mag 7, with the late‑1990s dot‑com bust, insisting the new tech giants rest on solid cash flow rather than hype. The surge lifted the S&P 500 to fresh highs, bolstering the view that earnings can endure trade wars and geopolitical risk.

A deeper look shows that rising federal deficit has inflated earnings. The Kalecki‑Levy Equation links corporate profit to the government shortfall, and deficits now exceed 6 % of GDP—double the share that powered profits in the dot‑com era, and are therefore substantial concern. Consequently, more than half of today’s profit surge stems from fiscal support, not pure market dynamism.

Meanwhile, the public market’s rosy picture masks a shift to private capital. Since 2000, listed firms have halved, while venture‑backed giants like SpaceX, Anthropic, Nvidia and OpenAI remain unprofitable. European earnings stay flat, and their deficits barely budge, highlighting a stark contrast. If bond yields rise and force fiscal tightening, the hidden fragilities of the American profit machine could surface quickly.