What I Learned Fact-Checking TikTok's Recession Predictor
And why you should test every viral theory that crosses your feed
My feed is full of confident economic predictions. Here's what happens when I actually test one.
The latest prediction? Labubu toy crazes signal an incoming recession. The theory sounds plausible: when luxury feels out of reach, people turn to affordable collectibles.
But most viral theories are just pattern-matching without understanding. So I tested this one against history's most famous consumer manias.
What I found surprised me.
Why this matters: Viral theories influence our everyday decisions (ex: investments, career moves, business strategies). By the end, you'll have a framework for evaluating any economic claim online.
Three historical test cases
I picked three famous consumer crazes from different eras. Each one tells a different story about prediction and panic.
Tulip Mania (1637) - The False Alarm
Remember the famous tulip bubble? Tulip bulbs were first introduced to Europe in the 17th century. It became so popular that single bulbs sold for the price of Amsterdam mansions.
Surely this predicted economic disaster? Nope.
Modern research shows it had limited impact on the prosperity of the Dutch Republic. Only about 350 wealthy people participated.
Verdict: Failed as recession predictor.
Beanie Babies (1999) - The Perfect Predictor
This one's different. Families sank life savings into these plush toys. Divorce courts divided collections. Some rare ones fetched up to $1,500.
Timeline: Beanie babies mania peaked in 1999. NASDAQ crashed April 2000. Recession began March 2001.
Verdict: Nearly perfect ~12-month leading indicator.
NFTs (2021-2022) - The Modern Predictor
NFTs (those blockchain-recorded digital art pieces like Bored Apes) saw trading volume peaked $17 billion in January 2022, but had 97% volume collapse by September.
Timeline: NFT decline began Q2 2022, just as the Fed started raising rates in March (first hike from 0.25% to 0.5%).
Verdict: Accurately signaled the end of easy money.
The real pattern
Consumer manias don't cause recessions. They reveal when our relationship with money becomes dangerously detached from reality.
During good times, rising assets and easy credit create what psychologists call the "wealth effect." People perceive themselves as richer. They can act irrationally, especially when FOMO kicks in.
The tipping point? When speculation becomes so widespread that non-collectors (like your barber and accountants) join in. That's your warning sign.
FYI, actual definition of recession is "significant decline in economic activity" typically lasting more than a few months. But the real signs? Rising unemployment, falling consumer spending, declining real personal income. The National Bureau of Economic Research makes the official call, usually months after it starts.
Why this time is different
The Labubu craze is happening during fundamentally different conditions than past speculative bubbles:
Money isn't easy anymore. Interest rates are high. Credit is expensive. Unlike 1999 (dot-com boom) or 2021 (stimulus checks), people aren't swimming in cash.
Consumer mood is pessimistic. Current confidence sits at 93.0 with future expectations at 69.0, well below normal. People are spending despite worry, not because of euphoric optimism.
It's niche, not mainstream. Labubu appeals to specific collector subculture. When your barber starts talking toy investments, then worry.
The framework that actually works
Here's when toy crazes predict trouble:
Society-wide speculation (not just collectors)
Easy money everywhere (cheap credit, rising asset prices)
Euphoric confidence (toys as guaranteed investments)
Current conditions? We're missing all three factors.
The bigger lesson
Most economic takes on social media are just pattern-matching dressed up as insight. But the same $300 toy purchase can mean very different things depending on the context.
Before panicking about any viral theory, ask yourself:
Are everyday people treating this like an investment?
Is money easy, and is caution out the window?
Or is it just enthusiasts being… enthusiastic?
Context matters more than the hype.
Test the theories. Check the conditions. Then decide.
Because in a world drowning in confident predictions, your best defense is asking better questions.