2001 Dot-Com Recession
The dot-com bust and 9/11 shock produced a mild GDP recession but a severe equity bear market. The S&P 500 lost 49% from its March 2000 peak, the Nasdaq lost 78%, and capex collapsed in the telecom and tech sectors.
What caused it
- •Burst of the 1995–2000 internet bubble and massive overinvestment in telecom capacity
- •Fed hiking from 1999 into 2000 to cool speculative excess
- •Corporate accounting scandals (Enron, WorldCom) compounding the repricing
- •September 11 terrorist attacks amplifying the consumer pullback
The indicator playbook
Tech-sector-led capex collapse showed up early in ISM new orders, inventory-to-sales ratios, and corporate profits. The Buffett indicator (market cap to GDP) peaked near 140% in March 2000 — well above every prior post-war reading until the 2021 peak exceeded it.
What ended it
Aggressive Fed easing (6.5% to 1%), the 2001 and 2003 tax cuts, and the emergence of the housing boom as a new growth engine. The recovery was jobless — unemployment kept rising into 2003.
Modern parallels
2022 tech drawdown and AI-capex buildout in 2023–25 rhyme with the dot-com dynamic. The key question is whether AI capex produces productivity gains this time, where the fiber-build boom of 2000 eventually did.