{"id":5299,"date":"2026-08-14T20:42:01","date_gmt":"2026-08-14T20:42:01","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=5299"},"modified":"2026-08-14T20:42:01","modified_gmt":"2026-08-14T20:42:01","slug":"over-400-of-gdp-top-analyst-finds-corporate-equity-double-the-level-from-the-dotcom-bubble-and-triple-1987s-black-monday","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=5299","title":{"rendered":"Over 400% of GDP: top analyst finds corporate equity double the level from the dotcom bubble \u2014\u00a0and triple 1987\u2019s Black Monday"},"content":{"rendered":"
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On Aug. 10, David Kelly calculated that \u201cthe market value of all U.S. corporate equity is now over 400% of GDP.\u201d That compares with 244% just before the pandemic, 204% at the peak of 2000\u2019s dotcom bubble, and 74% before the 1987 stock market crash known as Black Monday.<\/p>\n

Read more People are going to extreme lengths to stop themselves from being filmed through Meta\u2019s \u2018pervert glasses\u2019<\/a><\/p>\n

If it sounds familiar, that\u2019s because Kelly\u2019s metric is almost like the famous Buffett Indicator \u2014\u00a0the ratio of the total value of publicly listed U.S. companies to GDP \u2014\u00a0but it\u2019s a bit broader, covering all U.S. corporate equity, not just publicly traded stocks. The Buffett Indicator itself is above 200%, \u201cstrongly overvalued\u201d or far beyond historic norms. When the Oracle of Omaha debuted this metric in Fortune<\/em> in 2001, in co-authorship with Carol Loomis, they called it \u201cprobably the best single measure of where valuations stand at any given moment.\u201d At the time, they noted that the ratio had reached an unprecedented level in the late 1990s: \u201cThat should have been a very strong warning signal.\u201d<\/p>\n

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Fast forward to 2026, and the S&P 500 is up more than 13% year to date, following three blockbuster years after the game-changing release of OpenAI\u2019s ChatGPT. Underlining how much AI exuberance has boosted the market, Kelly found that second-quarter earnings included $150 billion of unrealized capital gains booked by just two large technology companies. That boosted pro forma earnings per share by 50% year over year. But after\u00a0stripping that out, earnings growth was closer to 20%.<\/p>\n

He offered a warning about how Wall Street still isn\u2019t Main Street. \u201cIn the end,\u201d he wrote, \u201cthe value of American corporations depends, to a large extent, on the work and spending of the American people.\u201d He argued that stock prices are unlikely to keep soaring \u201cunless the fortunes of American consumers and American workers see broader improvement.\u201d That\u2019s where the infamously K-shaped economy comes in.<\/p>\n

K-shape or C-shape?<\/h2>\n

The huge profit gains on Wall Street contrast with a real economy marked by meager job growth, wage growth trailing inflation for four straight months, and stagnant homebuilding. Kelly predicted that payrolls should grow 50,000 to 100,000 per month going forward \u2014\u00a0but July\u2019s poor report and downward revision for earlier months call that into question.<\/p>\n

Bank of America Institute flagged at nearly the same time that wage and spending gains have started to \u201cconverge\u201d across income brackets. Internal spending data showed a 5.4% increase in spending among lower-income households in July, compared to 4.9% for middle-income households. <\/p>\n

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Several days later, Apollo Global Management Chef Economist Torsten Slok noted the big box-office receipts for Spider-Man<\/em> and The Odyssey<\/em> show that \u201cthe consumer isn\u2019t tapped out.\u201d<\/p>\n

Read more \u2018It\u2019s not lights out for the economy\u2019: U.S. retail sales drop 0.6% in July<\/a><\/p>\n

Treasury Secretary Scott Bessent, in a CNBC interview several days earlier in August, pointed to 5.5% wage gains for the bottom quartile and declared that the \u201cK-shaped economy is over.\u201d<\/p>\n

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The much-hyped K-shaped economy, representing diverging outcomes for the wealthiest and poorest, is just outdated based on the data, he argued. \u201cI got sick of hearing about this K-shaped economy,\u201d he said, explaining that \u201cwe\u2019re seeing more of a C economy where the lower end of wage earners are finally calling it back.\u201d<\/p>\n

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BofA\u2019s spending data, however, showed that there remains one \u201cexception\u201d: the top 5% of earners, \u201cwhere strong balance sheets and rising asset prices continue to support outsized spending growth.\u201d If the AI-led wealth boom leads to a more widely shared expansion, the economy could move off its current dependence on affluent customers and a concentrated group of big tech firms.<\/p>\n

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The pattern holds true around the world, based on McKinsey Global Institute\u2019s Global Balance Sheet 2026 report, published in July. It found that the world\u2019s total stock of assets reached nearly $1.8 quadrillion in 2025, up from $1.7 quadrillion the year before, and that global household wealth grew to a record $570 trillion.<\/p>\n

Most of this, the institute found, was \u201cpaper wealth,\u201d with the U.S. equity market sitting dead center at the dynamic. American stocks were valued at 3.7x GDP and 2.4X the net assets on corporate balance sheets. <\/p>\n

Kelly, for his part, is betting on a softer landing for the economy, saying he expects the Federal Reserve to hold interest rates steady, inflation to keep drifting down toward the Fed\u2019s 2% target, and GDP growth to average about 2% next year. He advised investors to diversify away from a concentrated bet on AI stocks. The great convergence could very well continue, but until then, the gap between paper wealth and the real economy is stretched further than ever before. <\/p>\n

Read more One ticket, one gas station, $1 billion: Powerball\u2019s drought ends in Illinois<\/a><\/p>\n

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