Mastodawn

🧵
> The current value of all corporate stock is close to $80 trillion, more than 2.5 times GDP.

If PE ratios fell back to their long-term average of just under 20, it would destroy close to $40 trillion in stock wealth, an average of almost $300,000 per household.

If the PE fell back to its long-term average, and the after-tax profit share of GDP also fell back toward their level of a quarter-century ago, then the loss of wealth would be even larger.
https://cepr.net/publications/ai-bubble-monitor/#june82026
#DeanBaker #PriceToEarnings #BubbleHistory

The AI Bubble Monitor

Is there an AI bubble? Some indicators point to one — and when bubbles burst, there can be massive shocks in housing and job markets that last for years.

CEPR

bsmall2 1d ago

> ... a key question is this: How much are businesses willing to pay for AI? Until recently, AI enthusiasts were touting the rapid growth in revenue. It seems a big factor in that growth was companies spending money on AI, even if they didn’t have a productive use for it, because they thought it meant their companies were at the cutting edge in technology.
> That sounds crazy, but even large companies can often do things that are pretty crazy, as noted above.
https://cepr.net/publications/ai-bubble-monitor/#june222026
#DeanBaker #AIBubble #CrazyCompanies #TechBubble #BubbleHistory

The AI Bubble Monitor

Is there an AI bubble? Some indicators point to one — and when bubbles burst, there can be massive shocks in housing and job markets that last for years.

CEPR