Is the Stock Market in a Bubble? 2026 vs 2000 and 2007
On seven measures, today's US stock market is more stretched than at both the March 2000 and October 2007 peaks on 2, sits between the two on 4 and is less stretched than both on 1. Valuations are near 2000's, but the five-year price run (+46%) is far smaller than 2000's (+133%), and credit is tighter than in 2007. A bubble is only certain in hindsight, so this shows where things stand, not when they end.
How does today compare with 2000 and 2007?
| Measure | March 2000 | October 2007 | Today (September 2026) | Today is |
|---|---|---|---|---|
| Shiller CAPE | 43.2 | 27.3 | 40.4 | Between the two |
| US nonfinancial corporate equity value to GDP (Fed) | 163% | 115% | 255% | More stretched than both |
| Earnings yield minus 10-year Treasury yield | -3.9 pts | -0.9 pts | -2.5 pts | Between the two |
| Baa corporate bond spread over Treasuries | 2.11 pts | 1.95 pts | 1.48 pts | More stretched than both |
| 10-year minus 2-year Treasury yield | -0.27 pts | 0.56 pts | 0.34 pts | Between the two |
| Unemployment rate | 4.0% | 4.7% | 4.2% | Between the two |
| US share price gain over the previous 5 years | +133% | +109% | +46% | Less stretched than both |
The five-year gain is the US share price index (OECD, monthly average) over the previous 60 months. The first six measures come from FRED, Robert Shiller's data and the Federal Reserve. See each on the Crash Indicator's bubble comparison.
What did prices do after the 2000 and 2007 peaks?
US share prices indexed to 100 sixty months before each peak. Coral is the run into March 2000, amber into October 2007 and purple into today (month 0 is the peak, or today). Months on the horizontal axis.
Within three years of the peak, the index fell 28% after March 2000 and 53% after October 2007 at the deepest monthly reading. Those are the two worst episodes in this comparison, which is why they are the reference points.
What was different about each peak?
- 2000 was a valuation bubble. The Shiller CAPE hit 43 in March 2000, its record of 44.2 was set in December 1999, and the five-year gain was +133%.
- 2007 was a credit bubble. Valuations were moderate (CAPE 27), but credit spreads were tight and borrowing was heavy before it broke.
- Today has a CAPE of 40, the Fed's equity-to-GDP ratio at 255% (the highest of the three) and the tightest credit spread of the three at 1.48 points. Unemployment is 4.2% and the yield curve is not inverted.
How do you tell a bubble from an expensive market?
A bubble needs three things at once: prices far above what earnings can justify, rising debt, and euphoria that depends on prices continuing to rise. Valuations alone can stay high for years, as the 1990s showed: the CAPE passed 27 in December 1996 and prices rose for more than three years after. This site's Minsky model checks valuation, borrowing and credit together, and its triggers (a credit spread blow-out, a volatility spike or a Sahm rule signal) are what turn fragility into a decline. Read what a Minsky moment is.
For the valuation side, read what the Shiller CAPE ratio is and what the Buffett Indicator is.
Stock market bubble FAQ
Is the stock market in a bubble right now?
Valuation measures such as the CAPE (40) and the Fed's equity-to-GDP ratio are at or above their 2000 levels, but the five-year price run, credit conditions and unemployment look different. Whether it is a bubble is only known in hindsight.
How is today different from the dot-com bubble?
The five-year gain is +46% against +133% into March 2000, and the Fed's equity-to-GDP ratio is higher now. Valuations are comparable, but the run-up that produced them is smaller.
Could a crash happen without a recession?
Yes. 1987 had a crash with no recession and 2022 had a bear market with none. A recession and a crash are different events, and the indicators on this site track both.
What triggers a bubble to burst?
Usually a shock to credit or growth: spreads widen sharply, volatility spikes, or unemployment turns. This site's Minsky model watches those three triggers separately from the fragility signals.
Where can I see these measures?
On the Crash Indicator page, which shows today's readings, the bubble comparison with 2000 and 2007 and a track record of every indicator.