Economist Warns Two Key U.S. Indicators Are Flashing Red, Recession "Could Arrive at Any Time"
Nashnova编辑部
Finnish economist Tuomas Malinen flags corporate bankruptcies and a private-sector yield curve nearing inversion as twin warnings, saying America's economic floor 'could collapse at any time' — a call that runs squarely against Wall Street's prevailing optimism.
Who is this economist, and why listen?
Tuomas Malinen is a Finnish economist specializing in financial crises. This week he published a recession warning on his Substack.
His core claim: the US economy is on the edge of recession, and "the floor could collapse at any moment."
This means → he represents a minority voice on Wall Street — the Atlanta Fed currently projects Q3 GDP growth of 4%, and most analysts remain bullish on both the economy and the AI boom.
Red flag one: what do the bankruptcy numbers show?
In the 12 months through June, US bankruptcy filings topped 600,000 — up 12% year-on-year, the highest since the pandemic.
Malinen acknowledges the current level is well below the peaks after the 2008 financial crisis or the dot-com bust.
But his focus is the trend: a steady climb from post-pandemic lows that has not reversed.
In plain terms = bankruptcies are not at "crisis level" yet, but the direction is wrong — and it has not stopped.
Red flag two: what is the private-sector yield curve saying?
The indicator Malinen tracks: the spread between Baa-rated corporate bond yields — medium-grade bonds with maturities of 20 years or more — and the bank prime lending rate.
In plain terms = this curve measures the "risk premium for lending to companies." When corporate bond yields catch up to or exceed the prime rate, it signals that the market sees growing danger in corporate debt.
The curve is now approaching "inversion to zero" — corporate yields are about to surpass the prime rate.
This reflects a pattern seen before all three recent recessions — Covid, 2008, and 2001 — where this curve shifted from negative to positive. Malinen sees the current signal repeating that history.
The lone bright spot — how long can the AI boom hold?
The only positive signal in Malinen's framework is the ISM manufacturing new-orders index: it rose to 56.7 in July, its seventh consecutive month in expansion territory.
He attributes this bright spot to the data-center construction boom.
But his stance is cautious: the current prosperity is confined to a tiny corner of the economy — and could stop at any time.
The core debate: are there cracks beneath the surface?
Malinen draws a direct parallel between the AI boom and the dot-com bubble, warning that "if the AI trade collapses, the US economy could plunge into recession almost immediately."
He admits he cannot give a specific timeline for recession.
This means → his central logic is not "recession arrives tomorrow." It is this: the apparent strength of stock markets and economic data is masking structural cracks underneath — and whether that line of defense holds once the AI narrative wavers is the key test of his thesis.
Content is for reference only, not financial advice.