An economist who studies financial crises says the US is on the brink of recession. These are the 2 warning signs.

A professor who has spent years studying financial crises thinks the US economy is on the verge of trouble.

Tuomas Malinen, an economist who specializes in geopolitics and and financial crises, is laying out a grim outlook for the US. In a post on Substack this week, the Finnish professor said he analyzed several key barometers in financial markets and the economy. The findings ultimately supported the idea that the US is precariously close to another downturn, despite booming stocks and strong surface-level growth.

Malinen said he didn’t have a concrete timeline for when a recession could start.

“But we need to acknowledge that the bottom can fall beneath the US economy, practically, in any minute,” he warned.

Here are the three variables that Malinen analyzed:

US bankruptcies: Corporate bankruptcies remain well below their peak in the years following the Great Financial Crisis and the dot-com crash, but have climbed significantly since their post-COVID low.

In the 12 months leading up to June, the US recorded more than 600,000 new bankruptcy filings, up 12% from the 12 months leading up to June 2025, according to the US Courts office. It also marks the highest number of new bankruptcies the US has seen since the pandemic.

Bond yields: Corporate bond spreads are also flashing a potential warning for the US, Malinen said. He pointed in particular to the private sector yield curve, which he measured as the spread between Baa-rated corporate bonds with maturities of at least 20 years, and the bank prime rate, the interest rate that banks charge their most creditworthy institutional clients.

The private sector yield curve is close to uninverting, which means that corporate yields are close to suprassing the bank prime rate. That can happen if investors demand a higher yield due to perceived risks of holding corporate debt, or because overall interest rate expectations are rising, which can hurt risk-asset prices.

The curve is now signaling “an imminent onset of US recession,” Malinen said, referring to how the private sector yield curve turned positive leading up to the COVID-19 recession, the Great Financial Crisis, and the recession of the early 2000s.

Manufacturing new orders: The ISM’s manufacturing New Orders Index rose to 56.7 in July, marking its seventh straight month of expansion. This is the only variable flashing a positive signal for the economy, Malinen said, which he said may be attributable to the boom in data centers.

Even then, the signs are pointing to two troubling things about the US economy, Malinen said: 1), that only a small corner of the US economy is thriving, and 2) that the success of this area could “break suddenly,” he said, referring to fears that AI is the latest market bubble.

“If the above holds, it would indicate that the US economy is very close to the onset of a recession, which can start abruptly from the collapse of the AI-trade (little like after the implosion of the Dotcom bubble),” Malinen wrote.

Malinen, who has issued bearish warnings for the US economy for the past several years, is in the minority on Wall Street, where most forecasters are expecting growth to hold up and the AI boom to last for at least several more years. Economists at the Atlanta Fed are estimating that GDP will expand another 4% over the third quarter, indicating the US is far from tipping into a technical recession.