Beware of Our 'Jenga Economy'

Economist Rebecca Patterson is a little worried that the US economy is starting to look like a game of Jenga. In a New York Times essay, Patterson sees a parallel with the game in which players pull wooden blocks from a tower and place them on top—until the thing collapses. On the surface, with the stock market near record highs and economic growth chugging along, our current tower "appears sturdy enough," she writes. The problem is that we're losing too many support blocks from the base: mass layoffs in the public and private sectors, and the growing struggles of small businesses are two examples. But the bigger issue could come with tech companies—"today's most important economic support"—particularly those focused on artificial intelligence:

• "What could topple the tower? A.I. firms could hit constraints, such as energy needed to power data centers. They might not show as much revenue for their efforts as expected. Any number of catalysts, such as stubbornly high inflation that limits consumption and slows the pace of Fed rate cuts or a Chinese technology breakthrough, could knock the stock market sideways."
• Read the full essay.