Reddit users are increasingly predicting an economic collapse in the U.S., with some even preparing for a scenario similar to the Soviet Union’s demise after the Cold War. The growing concern is being fueled by factors such as inflation, debt, and job market instability.
What Happened: A Reddit user, who goes by the name Daniel, has been active on the r/economiccollapse subreddit for four years, told Business Insider that he is bracing for an economic implosion in the U.S.
He has invested all his savings in defense stocks, gold, and cryptocurrency, anticipating a shift to a wartime economy.
“The one thing that our economy is going to be guaranteed is a wartime economy. Only time will tell how bad it will truly get,” Daniel said.
Interest in pessimistic views of the market and the economy is rising, as indicated by a 17% increase in Google searches for “stock market crash” and a 15% surge in searches for “economic crash” over the last quarter. Membership on the r/economiccollapse subreddit has also spiked by 80% since the end of 2021.
Despite the prevailing pessimism, the U.S. economy has managed to avoid a predicted recession over the past two years. The labor market remains robust, with the unemployment rate near historic lows in March. However, the lived experience of the economy may not align with the strength of the reported data.
Freddie Smith, a real estate agent from Florida, rejects the label of alarmist despite regularly sharing cautionary messages about the economy on his social media platforms. In a recent TikTok video, Smith suggests that the current economic conditions, marked by soaring living costs, may surpass the challenges faced during the Great Depression, a perspective that some doomers share as they argue for a more realistic appraisal of the situation, according to the report.
“They’re still kind of sucking the money, pushing people to the edge,” Smith said.
Jonathan Rose, CEO of Genesis Gold Group, has observed a rising level of concern among his clients. According to Rose, there has been a significant increase in the number of investors purchasing physical gold as a means of preserving value, with estimates suggesting a surge of approximately 40% to 60% since the onset of the pandemic.
“I look at these 23-year-olds online talking about how they’re working 40, 50 hours a week and living with their parents,” Smith said. “The whole world has changed in the past 10 years … I guess the frustration is the lack of recognition of a broken system,” he said.
See Also: Atlanta Fed Chief Hints At Potential Interest Rate Cut This Year Amid Economic Uncertainties
Why It Matters: The concerns of Reddit users are not unfounded. The U.S. economy is facing a potential stagflation threat due to slower-than-expected growth and higher-than-anticipated inflation. This situation, as described by David Donabedian, the chief investment officer of CIBC Private Wealth U.S., is a “worst of both worlds report.”
Moreover, the traditional Wall Street adage “sell in May and go away” may not hold water this year, as analysts debunk the myth with strong evidence of positive stock market performance during the historically weak May-October period.
Given the potential economic downturn, even “Rich Dad Poor Dad” author Robert Kiyosaki is preparing to battle it out. He advises people to own their businesses, use debt as money to buy cash-flowing assets, save real gold and silver, and invest in Bitcoin (CRYPTO: BTC).
Meanwhile, investment strategistEd Yardeni has warned about the potential for a stock market “melt-up” driven by Federal Reserve rate cuts. This could lead to a surge in the stock market, potentially propelling the S&P 500 to record highs by the year’s end.
Read Next: Fed’s Rate Cut Could Trigger Stock Market ‘Melt-Up’, Warns Investment Strategist
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