This is how the US economy comes crashing down

Like Jenga blocks, some of the pieces seem fine, but the base is increasingly fragile.

- Rebecca Patterson

The range of American households willing and able to spend is shrinking, with consumption increasingly dependent on the country's wealthiest households, the writer notes. PHOTO: REUTERS

(REUTERS)

In the game of Jenga, players remove wooden blocks from a tower and place them on the top. With each move, the tower gets taller and increasingly unstable, until it collapses.

Welcome to the American economy of 2025.

Economic growth is robust and stock markets are hovering around record highs. Set on a foundation of supportive fiscal and monetary policy, the tower appears sturdy enough.

But a closer inspection shows that an increasing number of structural supports ~ across businesses, labour markets, consumers and stocks — are looking wobbly. A Jenga-like collapse, meaning an unexpected economic downturn, is not inevitable. But it is a growing, underappreciated possibility.

One of the most critical economic Jenga blocks removed this year has been small American companies, especially those focused on trade.

Small businesses, often defined as having fewer than 500 employees, play a critical role in America’s economy and employ 46 per cent of total workers. They have an even bigger presence in trade. A Department of Commerce study in April found that small firms account for a third of the total value of imported US goods and an overwhelming 97 per cent of all importing companies in America.

These small firms have had fewer resources than their larger competitors to navigate the Trump administration’s tariffs, such as finding new supply-chain partners, lobbying the government for help or managing costs to absorb tariffs without hurting profitability.