The market costs more than two years of American output
August 8, 2026
Warren Buffett once called market value divided by GDP "probably the best single measure of where valuations stand at any given moment." That measure now reads 214%, which we grade Strongly Overvalued.
Some reference points. The long-run average is roughly 100%. The 2000 peak reached 140 to 150%. 2021 cleared 200%. We are above all three.
In plain terms, the stock market currently costs more than two years of everything the United States produces.
The objection is a good one
American companies earn a large share of their money abroad, while GDP only counts what gets produced at home. As those companies globalized, the numerator grew for reasons the denominator never captured, and the ratio drifted upward without anything speculative happening.
That criticism is correct, and it's why we don't grade the Buffett Indicator against a flat 100% line. We fit an exponential trend with standard-deviation bands, so the benchmark rises as the structural drift does. 214% is extreme against that trend, not just against a textbook rule of thumb that stopped being useful decades ago.
The second objection is interest rates: cheaper money justifies higher multiples. We take that seriously enough to give it two votes of its own, through Excess CAPE Yield and the interest rate model. Accounting for rates is not the same as letting them erase the reading.
What survives the objections
Set the denominator argument aside and something stubborn is still there.
Tobin's Q is 1.82, which compares market value to what it would cost to rebuild the companies. Price-to-sales is 3.81×, which compares price to revenue. Neither divides by GDP, and neither cares where the earnings were booked.
A globalized earnings base can explain drift in one gauge. It has a much harder time explaining why three gauges with three unrelated denominators all landed in the same corner at the same time. That's the part of the picture we'd want an answer to before calling this normal.
You can track the live number on the homepage. People remember 2000 as the cautionary tale, and on this measure we are well past it.