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 0.7199, continuing a downward trend from a peak of 1.0090 in April 2021, reflecting a significant decline of 28.7% over the past five years. This persistent decrease indicates that tech valuations are increasingly detached from economic fundamentals, with the ratio now well below the warning threshold of 0.65, suggesting heightened recession risk as investor sentiment may be overly optimistic about tech sector growth relative to the broader economy.
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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