Indeed, some have drawn the comparison with the high-tech investment boom that peaked in 2000. As events have unfolded, it appears that firms concluded that the investment they undertook in those years was not justified; the subsequent drop in investment suggests that, in hindsight, firms concluded that they had “overinvested” in high-tech equipment; and that sharp cutback in investment created a recession.
Is it possible, these commentators have asked, that the current boom in housing and durables will leave us with similar regrets in a few years? Furthermore, prices of houses have been rising faster than inflation in recent years, reminiscent of the surge in equity prices through 2000.