From the President’s Desk: The Even Bigger Short

In the weeks since I started researching and compiling this blog, the word “bubble” has graced more and more headlines. I, for one, am glad to see this: it feels good to read about more experts noticing that parts of the Ai market feel a bit … delicately stacked. Could this house of cards fall? Let me offer a little insight!

First, we’ll start with something relatable. If you’ve read (or watched) Michael Lewis’s “The Big Short,” then you’re likely familiar with the technical details behind the 2008 economic crash. (Incidentally, in this piece, I’ll refer to any major devaluation of overall markets as a “crash,” even if it took some time – as in 2002 – or wasn’t technically an economic depression – as in 2008. While terms like “cooling” and “recession” may be accurate by definition, they’re used to downplay the real severity of wealth loss for businesses and consumers, as in 2002 and 2008).

You also might know the collapse of the “housing bubble” (a broad term referring to many underlying economic components – for more, read the book!) led to a collapse of the broader economy, both domestically and abroad. And you’re probably aware that this 2008 crash was not brought on by just one moment, trade, policy, or bad decision. It was brought on by a host of factors that piled on top of one another to the point of failure.

The same was true in 2002. The collapse of the “dot com bubble” is regularly cited as its cause, but it was just one of many issues that led to disaster. And before that, 9/11 rightfully caused investor and consumer confidence to wane, with terror and fearmongering driving concern for both physical and economic safety.

2001 also saw the collapse of Enron. If you’re not old enough to remember, this was the U.S.’s seventh-largest company (other rankings, including Fortune, listed it higher), and its parent company Arthur Andersen was, by many reports, in the world’s top five companies. In today’s reality, it would be akin to Meta or Tesla filing for bankruptcy. The NASDAQ’s 75% loss of value wasn’t from one bad play or investment; it was from an array of causes that led businesses and consumers to panic.

I’ll continue referring to business and consumer spending because, for most of us, that’s essentially what the economy is: companies scaling to develop, produce, and sell goods; consumers buying the goods; and consumers, in turn, working for those companies to earn more money to – you guessed it – buy more goods. This is a dramatically simplified model of economics, but it tells you everything you need to predict economic health.

For those of us who work in infrastructure and aviation, these cycles are more than economic theory. They shape how projects are funded, scheduled, and delivered. When confidence slips or capital costs rise, even the most essential projects can stall, creating ripple effects that outlast the market itself.

The economic crashes of 2002 and 2008 are great examples we can learn from because of the patterns at play in both scenarios. And these patterns are ones we are beginning to see today. The same economics that were present in 2000, and again in 2007, are now at work in 2025’s economy. And it seems we’re yet to realize it! Some of the patterns from those times include:

• A few notable assets scaled at a vastly different pace than the broader market: Indices like the Dow Jones or NASDAQ are designed to capture a broad and diverse array of businesses and performance. But sometimes, we see individual companies whose performance dramatically departs from that of the index as a whole. In 2002, these companies were Intel (still around), Pets.com (no such luck), and Enron (whose stock outperformed the market by about 70% before its dissolution). In 2008, it was Lehman Brothers (a $60 billion meltdown) and GM (still around, though in 2009 their stock price hit Great Depression-era lows).
• Extreme market capitalization: This was driven by a small handful of firms, as their valuations reached unprecedented – and typically unjustified – heights.
• Consumer spending took a massive nosedive: Consumer confidence is the best singular leading indicator of economic performance. Think back to the simplified model that bases the economy (how much businesses produce and sell) on how much consumers purchase. The CPI-U, which measures prices for all urban consumers in America, clocked in at 4.1% in 2007 – right before the crash. (As a fun aside, the production of cardboard boxes can be used as a key indicator; if box manufacturers anticipate a downturn in spending, they’ll reduce the number of boxes used to ship products. In 2025, containerboard production in the U.S. is down about 9% YTD. The last time the industry saw a drop of that scale was … in 2008.)
• Business spending declined: Big businesses laid off staff and closed locations to cut costs while raising prices for consumers. Small businesses closed up shop.
• Economic headlines dominated the news cycle: If you’ve tuned into the news lately, I don’t have to tell you groceries are going up and tariffs have led to turmoil. We’re hyperaware of the consequences of our individual decisions, and the toll can be significant. As a good example, it used to be that after informed research and a thorough decision-making process, the Federal Reserve could adjust economic factors to help keep the economy from growing or shrinking uncontrollably. Now, a TikTok post about how the Fed is considering a meeting might cause the economy to grow or shrink by more than a percentage point in a single hour.

These factors can point you to any company – or any single sector of the economy – outgrowing the market. Have you noticed any small group of companies whose valuations extremely outpace those of their peers, or whose valuations are unrelated to their actual profitability? Is there a downturn in consumer spending or consumer confidence? After all, everyday prices are rising higher (CPI YTD is 3%) and consumers are turning to bargain goods. Have any major businesses announced mass layoffs or widespread store closures? The economic headlines (and indicators) continue to stack up.

What I’m writing about here, as referenced in the intro, is not a single sign of trouble, but rather a series of trends – both below and on the surface – among a large, diverse pool of datasets which we can assess to determine a likely outcome. We often run these assessments in engineering: hundreds of pounds of snow on a roof can cause a collapse, but there is no single flake of snow that we can blame as the cause of failure.

Each time a new policy causes a downturn in economic production, each time a decision drives up consumer costs, and each time a news headline causes another Ai startup to reach a billion-dollar valuation, the individual snowflakes begin to pile up.

In aviation and infrastructure, economic cycles don’t just move markets. They determine which runways get built, which terminals expand, and how communities invest for the future. They determine who has access to travel and who does not. They affect not just us as companies in this space, but the everyday travelers (including you and me) who count on infrastructure networks to live our lives. Recognizing the signs early allows us to plan smarter, not slower.

P.S. For perspective, many people assume subprime loan packaging disappeared after it helped trigger the 2008 financial crisis. It didn’t. And the consequences are surfacing again. In September 2025, major banks – including JP Morgan and Fifth Third – quietly wrote off millions in subprime auto debt. While recent corporate statements offer little detail, reporting from earlier this fall paints a far more troubling picture. And if we’ve learned anything from 2020’s market crash – where the economic strains of 2018 and 2019 helped set the stage long before COVID-19 hit – it’s that early warning signs matter. So, today’s question becomes: what else should we be watching for now?