Over 400% of GDP: top analyst finds corporate equity double the level from the dotcom bubble — and triple 1987’s Black Monday

JPMorgan Asset Management's chief global strategist, David Kelly, warns that America's stock market is at an all-time high, not seen in the past 40 years. According to Kelly, the market value of all U.S. corporate equity has surpassed 400% of GDP. This is compared to 244% just before the pandemic, 204% during the dotcom bubble peak, and 74% at the time of the 1987 stock market crash, known as Black Monday.

Kelly's metric, which includes all U.S. corporate equity, not just publicly traded stocks, resembles the famous Buffett Indicator but is broader. The Buffett Indicator, a ratio of the total value of publicly listed U.S. companies to GDP, is also above 200%, signaling strong overvaluation. The impressive performance of the S&P 500, up more than 13% year to date following the release of OpenAI's ChatGPT, has largely driven this surge.

However, Kelly cautions that the high stock prices are not solely the result of strong economic growth. He emphasizes that corporate value depends on the work and spending of American people and predicts that stock prices are unlikely to keep rising unless the fortunes of American consumers and workers improve. The K-shaped economy, characterized by diverging outcomes for the wealthiest and poorest, has been a concern, but recent data suggests it may be evolving into a more uniformly growing "C-shaped" economy.