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Illustration: Rebecca Zisser/Axios

While the rest of the U.S. economy reeled from devastating losses in 2008-9, the tech sector looked on sympathetically while wondering to itself, "Are things really that bad?"

The big picture: That's partly because the tech industry was well insulated from the financial meltdown's real-estate-focused epicenter. And Silicon Valley had already experienced its own financial bust at the start of the decade, leaving the industry with more solid growth and less hot air.

For tech, the 2001-2 recession — considered mild in most of the nation — was epic, scarring.

  • After the dotcom bubble popped, the tech-heavy NASDAQ index lost 3/4 of its value between March 2000 and Dec. 2002.
  • A generation of software developers and designers got to know what it's like to be laid off. San Francisco's South of Market neighborhood — today, a hive of startups and chic luncheries — became a ghost town.
  • If the NASDAQ today experienced a drop like it did in 2000-2002 and the index lost 3/4 of its value, it would fall to 2000, squashing today's cushy portfolios, beheading unicorns and destroying trillion-dollar valuations.

The industry experienced only limited recovery during the mid-2000s, took a brief dive again during the 2008 crisis, and then jumped on a bull for a decade, rising from its spring 2009 low near 1300 to around 8000 today (that's a 600% return).

Modern tech has always been a cyclical industry, but its boom-bust pendulum has been stuck on the side of growth for a full decade now:

  • Cash has flooded in as investors around the world looked for higher returns during a long era of near-zero interest rates set by central banks trying to stoke a broader recovery.
  • Technology investments from previous eras — in everything from fiber backbones to wireless broadband to more versatile software development tools — delivered big payoffs.
  • Innovations in machine learning and AI, device miniaturization, cryptocurrency, and autonomous vehicles held out one promise after another of uninterrupted growth.

The bottom line: Tech is hardly immune from future downturns, and any number of disasters — from a full-on trade war with China to a massive earthquake along the San Andreas — could trigger a race to the exits.

  • A single big bust is less likely than a series of smaller pops, as enthusiastic investors and funds overplay their hands on one tech fad after another. For instance, a lot of experts think there's a bubble in scooters right now.

Go deeper

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.

Mike Allen, author of AM
2 hours ago - Politics & Policy

Third Way: "Big Lie" could become "Big Coup"

Graphic: Third Way

Third Way, the center-left think tank, is urging fellow Democrats to respond to the Capitol riot with "the size, scope, and seriousness of a presidential campaign," co-founder Matt Bennett tells me.

Driving the news: "For the first time in U.S. history, a party must mount two parallel presidential campaigns: one to win the election, and the other to prevent its theft," Bennett said, calling this "a Paul Revere moment."

Advocates say Biden has let Haitian migrants down

Photo illustration: Aïda Amer/Axios. Photos: Chip Somodevilla/Getty Images, Christian Torres/Anadolu Agency via Getty Images

Continued turmoil in Haiti is causing a growing number of Haitians to try to make it to American shores — and some advocates say the Biden administration isn't supporting this community in its time of crisis.

The big picture: Haitian-American activists in South Florida told Axios Today they feel like President Biden has gone back on campaign promises he made to the community to stand up for them.