Former IMF chief economist Gita Gopinath; world dangerously dependent on American stocks

There are good reasons to worry that the current rally may be setting the stage for another painful market correction. 

The consequences of such a crash, however, could be far more severe and global in scope than those felt a quarter of a century ago (dot com).

At the heart of this concern is the sheer scale of exposure, both domestic and international, to American equities.

American households have significantly increased their holdings in the stockmarket

Foreign investors, particularly from Europe, have  poured capital into American stocks, while simultaneously benefiting from the dollar’s strength.  

In sum, a market crash today is unlikely to result in the brief and relatively benign economic downturn that followed the dotcom bust.

Gita Gopinath is the Gregory and Ania Coffey Professor of Economics at Harvard University. She was the first deputy managing director of the IMF from 2022 to 2025 and its chief economist from 2019 to 2022.

By Invitation | A meltdown like no other?

The Economist 15 October 2025

https://www.economist.com/by-invitation/2025/10/15/gita-gopinath-on-the-crash-that-could-torch-35trn-of-wealth