A frightening recession indicator is flashing red — and Americans can see it all over Main Street.

Experts told the Daily Mail that a sudden surge in bankruptcies and store closures — hitting mom-and-pop shops, small restaurants, and local retailers — is an early warning sign that the economy is starting to crack.

'The little guys are going to start falling first,' Joe Barsalona, a Delaware-based bankruptcy lawyer at Pashman Stein Walder Hayden, said.

'A recession is coming. I agree with economists that the increase in small business bankruptcies is a canary in a coal mine.'

Despite last-ditch efforts from owners, Subchapter V bankruptcies, a restructuring program created for small businesses, are on the rise. By the start of December, 2,221 US businesses had filed for Subchapter V bankruptcy, according to new analysis from economists at The Kobeissi Letter.

That was already more small business bankruptcies than the 2,211 filings through all of 2024, even with weeks still left on the calendar.

The filings still represent a small fraction of America's roughly 33 million small businesses, but economists say the acceleration — not the raw number — is what's raising alarms.

And the trend has gotten worse in the back half of 2025. 'US small business bankruptcies are surging as if there is a recession,' analysts at The Kobeissi Letter wrote in a December 6 post on X.

But, he warns that the increase is a worrying sign for the broader economy.

'This is going to lead to a further increase in large-size bankruptcies and distress in the economy,' Barsalona said. 'We're just seeing the start of this.'

https://www.dailymail.co.uk/yourmoney/article-15427659/mom-pop-bankruptcy-recession-main-street.html