Dot-com bubble collapse

Conditions at the time

Investment growth driven by advances in information technology produced excess capacity in some industries.

How events unfolded

Equities corrected after their 2000/3 peak, with particularly pronounced declines in the technology sector.

Stakeholders and impacts

Technology companies, investors, borrowing companies and households reassessed their outlooks.

Information available at the time

In 2002, the Federal Reserve chairman discussed the investment expansion and excess capacity of that period.

Findings confirmed later

The 2003 monetary-policy report recorded the 2002 equity decline and problems with confidence in corporate accounting.

Alternative interpretations and limitations

Distinguish innovation’s long-term productivity effects from short-term overvaluation; tightening is not asserted as the sole cause of the collapse.

Source-based context and interpretation

Greenspan's follow-up speech described steep losses in equity wealth and capital investment without the immediate severe contraction one might have expected. Long-term earnings expectations had risen alongside corporate default-risk premiums. Optimism about growth and downside risk could increase together. ASSETCASTING interpretation: Strong innovation expectations do not imply small risks. Read equities, earnings and credit exposure together; the speaker's contemporaneous retrospective is not a rule that all bubble collapses cause only mild economic damage.

Evidence coverage through 2002-08-30 · Sources checked 2026-10-14

• Economic volatility ↗

Related events and periods1

• Global economic integration, IT investment, and recurring financial crises →

  An event or period whose recorded start falls within this editorial interval. This does not establish that it caused or represents the characteristics of the era, nor guarantee that the entire period falls within the interval.