NASDAQ / GDP Ratio — Tech Valuation vs Economy
Track the NASDAQ Composite to GDP ratio. When tech valuations disconnect from economic output, it signals speculative excess and heightened crash risk.
Current Value
Trigger Level: >0.65 = tech valuations detached from economy
Historical Trend
AI Analysis
Today's NASDAQ/GDP ratio stands at 0.8127, showing a slight decrease from its recent peak of 0.8253 on August 14, indicating a trend of high tech overvaluation that remains concerning. Over the past month, the ratio has fluctuated within a range of 0.7807 to 0.8253, with the current value still significantly above the danger threshold of 0.65, suggesting that tech valuations are increasingly detached from economic fundamentals. This persistent overvaluation signals heightened recession risk, as the sustained high ratio reflects investor optimism that may not be supported by economic growth, potentially leading to a market correction. The recent decline from the peak could indicate the beginning of a reversal, but the overall trend remains dangerously elevated.
What is the NASDAQ/GDP?
The NASDAQ/GDP ratio divides the NASDAQ Composite index by nominal GDP (in billions). Given NASDAQ's tech-heavy composition, this metric captures tech sector valuation relative to the real economy.
Why It Matters for Recession Risk
Tech has become a dominant share of the economy. When NASDAQ growth dramatically outpaces GDP, it echoes the dot-com bubble dynamics where tech valuations became completely detached from reality.
Historical Context
During the dot-com bubble, NASDAQ hit 5,000 with GDP around $10T (ratio ~0.5). After the bust it crashed to 1,100. Current levels near 0.65+ represent historically elevated tech valuations relative to economic output.
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