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Earlier this week, the European Central Bank issued a dire warning<\/a>, warning that a \u201cmarket correction\u201d following years of AI hype and massive spending could be nigh<\/a> \u2014 a crash that could have enormous international consequences.<\/p>\n It joined a growing chorus of analysts warning of urgent signs<\/a> of an impending market collapse, a sobering possibility for the US economy that\u2019s grown incredibly overleveraged on AI<\/a>. Investors are paying orders of magnitude more for every dollar<\/a> of average annual profits, indicating that something is seriously amiss.<\/p>\n In a Substack post<\/a> earlier this week, first spotted by Business Insider<\/a>, financial crisis expert and University of Helsinki economics professor Tuomas Malinen cautioned that \u201cwe need to acknowledge that the bottom can fall beneath the US economy, practically, in any minute.\u201d<\/p>\n He pointed out two significant indicators in financial markets. First, corporate bankruptcies are on the rise. According to the US Courts office, the US recorded over 600,000 new bankruptcy filings between June 2025 and June 2026, an increase of 12 percent over the preceding 12 months and the highest since the COVID-19 pandemic.<\/p>\n Second, Malinen also singled out private sector yields, which are the income investors earn, expressed as a percentage of the income\u2019s market value.<\/p>\n Historic records show that when this indicator rises above the bank prime rate, the base interest rate used by banks, a recession frequently follows, including after the pandemic and the 2008 financial crisis.<\/p>\n The curve is now indicating an \u201cimminent onset of US recession,\u201d the economist wrote.<\/p>\n That\u2019s especially true if the AI industry were to \u201cbreak suddenly\u201d \u2014 the long-feared collapse of the AI bubble \u2014 Malinen argued.<\/p>\n Making sense of the current socioeconomic climate is puzzling, to say the least. While the average American is struggling to make ends meet, with persistent unemployment and real wages stagnating, the GDP is growing and the stock market is reaching record highs. Economists have called the phenomenon a \u201cboomcession<\/a>,\u201d as regular people feel like they\u2019re being left behind even as the economy is sizzling for the wealthy.<\/p>\n Adding to the tension, the war in Iran is spiking oil prices, and fears of rising inflation linger.<\/p>\n To veteran economist David Rosenberg, the main reason the US hasn\u2019t dipped into a recession<\/a> yet is unfaltering enthusiasm for AI.<\/p>\n The tech is \u201csapping the momentum out of the rest of business capital spending,\u201d he said during a recent podcast appearance<\/a>, while pending on the \u201cold eocnomy\u201d is dropping.<\/p>\n \u201cWhen you strip out the AI spend, the economy is actually very weak,\u201d he said. \u201cWithout the AI boom, we probably would be in a recession.\u201d<\/p>\n