Meet the group preparing for a Soviet Union-type collapse of the US economy
- This post originally appeared in the Insider Today newsletter.
Welcome back! Take extra care to pick the right outfit today, because it could affect your mood. It's called "dopamine dressing," and it's all about feeling better by wearing your favorite styles.
In today's big story, we're looking at the people preparing for the collapse of the financial system.
What's on deck:
- Markets: Why America can't seem to quit inflation.
- Tech: How Mark Zuckerberg turned against the news industry.
- Business: The man leading the fight to legalize MDMA therapy.
But first, it's the end of the world and they know it (and they feel fine).
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The big story
Preparing for the worst
Opinions fluctuate on the economy, but one group has a decidedly strong take.
In the subreddit r/economiccollapse, users are preparing for a Soviet Union-type fall of the US economy, writes Business Insider's Jennifer Sor. From investing in defense stocks to refusing to hold any savings in cash, the economic glass isn't half empty in the eyes of these users — it's almost dry.
The movement is gaining popularity, with the subreddit's membership growing 80% from the end of 2021 to the end of 2023.
Even passing interest in the potential downfall of the economy is on the rise. Searches for "stock market crash" and "economic crash" rose 17% and 15%, respectively, according to data Jennifer obtained.
There's an element of alarmism here, but the general pessimism mirrors how many Americans feel about the economy.
The middle class believes the life they aspired to is no longer possible. Further down the economic totem pole, ALICEs (asset limited, income constrained, employed) are struggling to make ends meet. Even those entering retirement aren't financially prepared.
Economic doomsayers do make you wonder about cracks in the economy.
The housing market's sky-high mortgage rates have been a problem for a while. But now, with supply on the rise, it's sellers, not buyers, who could be in trouble. To make matters worse, more and more houses in the US are worth significantly less than the mortgages financing them.
The stock market's been relatively strong, but there are some caveats. We have to thank AI for a good chunk of that. And considering the healthy amount of exaggerating companies have done to get on the AI bandwagon, it's easy to see how it could all come crashing down.
Ok, but jobs are still good, right? The unemployment rate is incredibly low!
Yes and no. Job growth slowed a lot in April, and it's hard for certain demographics, like high earners, to switch jobs.
Well, at least interest-rate cuts will provide some relief!
So… about that.
The number of companies filing for bankruptcy is spiking, cuts continue to get delayed. In fact, some experts speculate the economy will need to crash before cuts come.
News Brief
Your Monday headline catchup
A quick recap of the top news from over the weekend:
- Trump's 'multi-tasking' defense is falling apart in court.
- Ukraine was a magnet for foreign fighters. After 2 bruising years, many are disillusioned or dead.
- Putin axes defense minister, replaces him with an economist.
- Ncuti Gatwa says he feels 'sad' for those tuning out of the new season of 'Doctor Who' because of its push for diversity.
3 things in markets
- Yes, inflation is back. But there's still a path toward "economic nirvana." Neil Dutta, head of economics at Renaissance Macro Research, argues concerns over inflation are overdone. In fact, his reading of the data is that a soft landing is still in the cards.
- An investing legend dies. Billionaire hedge fund manager Jim Simons died Friday at the age of 86. Renaissance Technologies, the fund he founded in 1982, is one of the most successful hedge funds in history with 66% in annualized returns (before fees) over a 30-year period.
- The US-China rivalry could be a game changer for Big Tech. Sources told BI that mega-cap earnings growth will likely come under pressure from tensions between Washington and Beijing. Apple and Tesla are among the firms that could be particularly vulnerable.
3 things in tech
- How Mark Zuckerberg turned against the news. After the 2016 election, Zuckerberg held regular discussions about how to make news on Facebook more trustworthy and reliable. There was talk of buying a news outlet, or Facebook starting its own. But the CEO has since turned on the industry — thanks in part to cost, personal animosities, and Rupert Murdoch, insiders say.
- A new crop of startups wants you to make friends — IRL. In an attempt to solve Gen Z and millennial loneliness, a new wave of companies is trying to help people make friends the old-fashioned way: through in-person events and meetups.
- OpenAI is teasing something big. CEO Sam Altman promised last week that the ChatGPT developer will announce "new stuff" that "feels like magic" today. He shot down rumors that OpenAI is poised to release a search engine of its own, but didn't deny that the company is working on a search product.
3 things in business
- Credit cards are getting smarter. Credit-card fraud protection is still far from perfect, but banks are getting much better at discerning which payments are fraudulent and which are legit. That's thanks to the astounding amount of data companies have collected on their customers.
- One man's mission to legalize MDMA. For decades, Rick Doblin and MAPS, the nonprofit he founded, have been pushing to legalize medical MDMA. Now, the FDA could issue its approval as soon as this summer. However, insiders have begun voicing concerns about possible ethical lapses in clinical trials and questioning whether MAPS can effectively lead the movement into the future.
- These people beat the millennial odds. The unique economic circumstances of the past few years have helped some members of the generation to surge ahead financially. Millennials that managed to buy real estate before the start of the pandemic have tended to be the big winners.
In other news
- Senior managers at Globe Life division traded racist memes.
- Netflix said it didn't want to be in sports. Now it could be streaming two NFL games on Christmas.
- A Trump voter proved Mike Lindell wrong. Now he wants his $5 million.
- The $5 McDonald's meal may be making a grand comeback.
What's happening today
- Today's earnings: BuzzFeed and other companies are reporting.
- FOX will host its annual upfront presentation, unveiling its 2024-25 program lineup.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London. Grace Lett, associate editor, in Chicago.