Dot-com bubble 2000-2002: what warned first
Dot-com bubble and 2001 recession: from March 10, 2000 to October 11, 2002.
Updated
What happened?
Tech stocks hit highs in March 2000 and fell for more than two years, until October 2002. Along the way came the official 2001 recession (March to November) and the September 11 attacks. For this analysis, the episode runs from March 10, 2000 to October 11, 2002.
What would Crisis Monitor have shown?
Recalculating the index each week with the data available at the time, it stood at 24 out of 100 when the decline began and peaked at 74 in Oct 2001. The index moved to Alert (35 or more) in Apr 2000 (1 month after) and entered Crisis (60 or more) in Dec 2000 (10 months after).
This is a reconstruction made after the fact using weekly data: it helps show how the indicators behave, but it does not guarantee that things will happen the same way again.
How did the data move in that crisis?
From one year before to the end of the crisis. The vertical line marks when it began; the dashed red line is the level beyond which the data point becomes a concern.
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Which data points warned first?
One data point entered the stress zone before the crisis began: long vs short rates (2 years).
Gold and copper are not part of the index, but they help show fear and activity: see how they moved on the gold and copper pages.
The first time each data point entered the stress zone (score 66 out of 100), searching from 12 months before the start. “Before” = it warned before the crisis began; “after” = it reacted late. Note: after another crisis, some data points were still elevated from the previous one.
| Indicator | How does it usually behave? | When did it first become a concern? | When did it warn? | Moment of peak stress |
|---|---|---|---|---|
| Long vs short rates (2 years) | Usually warns early | Feb 2000 | 1 month before | -0.49% Aug 2000 |
| Dollar strength | Moves with the crisis | Mar 2000 | at the start | 115.37 Sep 2000 |
| Stock market fear (VIX) | Moves with the crisis | May 2000 | 2 months after | 43.74 Sep 2001 |
| Ease of borrowing | Usually warns early | May 2000 | 3 months after | 0.03 Jun 2000 |
| Long vs short rates (3 months) | Usually warns early | Jul 2000 | 4 months after | -0.83% Dec 2000 |
| Unemployment benefit claims | Usually warns early | Dec 2000 | 9 months after | 61.3% Oct 2001 |
| Store sales | Moves with the crisis | Jan 2001 | 10 months after | -3.2% Oct 2001 |
| Consumer sentiment | Usually warns early | Feb 2001 | 11 months after | -25.0 pts Oct 2001 |
| Credit of ordinary companies | Usually warns early | Mar 2001 | 12 months after | 3.90% Oct 2002 |
| Financial stress (St. Louis) | Moves with the crisis | Mar 2001 | 13 months after | 2.02 Sep 2001 |
| Recession probability | Moves with the crisis | Apr 2001 | 13 months after | 30.0% Jun 2001 |
| Factory output | Moves with the crisis | May 2001 | 14 months after | -5.0% Dec 2001 |
| Rise in unemployment (Sahm rule) | Moves with the crisis | Jul 2001 | 16 months after | 1.13 Nov 2001 |
| Copper vs gold | Usually warns early | Sep 2001 | 18 months after | -35.1% Oct 2001 |
| Credit of risky companies | Usually warns early | FRED only publishes the last 3 years of this series (ICE license) | ||
Does the current moment resemble that crisis?
Score from 0 to 100 for each area, today and at different moments of that crisis.
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How does everything look now? See the live dashboard.