Expert on Financial Crises Says the Signs Are Impossible to Miss

This week, the European Central Bank issued a serious warning about the possibility of a "market correction" following years of hype around artificial intelligence (AI) and heavy spending. This could lead to a crash with significant global ramifications. Analysts are now sounding the alarm about the urgent signs that an impending market collapse may be imminent, which could have a severe impact on the US economy, which has become heavily reliant on AI.

Financial crisis expert and University of Helsinki economics professor Tuomas Malinen, in a recent Substack post, emphasized that "we need to acknowledge that the bottom can fall beneath the US economy, practically, in any minute." He highlighted two key indicators in financial markets that suggest this. First, there has been a rise in corporate bankruptcies.

The US Courts office reported that there were over 600,000 new bankruptcy filings between June 2025 and June 2026, a 12% increase over the previous year, the highest since the COVID-19 pandemic. Second, Malinen pointed out that private sector yields, which represent the income investors earn as a percentage of the income's market value, have risen above the bank prime rate, the base interest rate used by banks.

Historically, when this indicator exceeds the bank prime rate, a recession typically follows. The economist warned that the situation could lead to an "imminent onset of US recession," especially if the AI industry were to "break suddenly" — a long-feared collapse of the AI bubble. The economic climate is complex, with the average American struggling to make ends meet due to persistent unemployment and stagnant real wages, while the GDP continues to grow and the stock market reaches record highs.

Economists have described this as a "boomcession," where regular people feel left behind as the economy thrives for the wealthy. Meanwhile, the war in Iran is driving up oil prices, and concerns about rising inflation persist. Veteran economist David Rosenberg believes the main reason the US has not yet entered a recession is the unwavering enthusiasm for AI.

He explained that AI is "sapping the momentum out of the rest of business capital spending" while spending on the "old economy" is dropping. "When you strip out the AI spend, the economy is actually very weak," he stated. "Without the AI boom, we probably would be in a recession."