Bankruptcy filings in the U.S. are totally at their highest since, like, forever! According to S&P Global, there have been more companies filing for bankruptcy in the first half of 2024 than in any other year since 2010. It’s, like, super serious!
In the first six months of this year, there were over 3,200 bankruptcy filings. Just to give you a sense of how cray-cray that is, during the same period last year, there were only about 2,200. That’s, like, almost a 50% increase! And when you compare it to the first half of 2020, at the start of the pandemic, it’s even more shocking because it was only around 2,800 back then.
So, like, why is this happening? Well, according to Mike Wilson, the Chief Investment Officer at Morgan Stanley, the economic climate is totally unstable right now. He said, “The outlook for corporate earnings looks weak, and the political uncertainty isn’t helping.” Basically, companies are earning less money, and with the whole election drama, it’s making everything worse. Plus, there’s this prediction that stocks might face a 10% correction soon. That means companies listed on the stock exchange will be worth an average of 10% LESS than they are worth now!
Another expert, S&P Global’s chief economist, Paul Gruenwald, added that “We are seeing the ripple effects of higher interest rates and tighter credit conditions. Companies that were already struggling are finding it even harder to stay afloat.” So, it’s, like, the economy is squeezing them out!
There are several reasons behind this wave of bankruptcies. For one, the cost of borrowing has totally gone up because of higher interest rates. Then, there’s all this uncertainty about the upcoming elections, which is making investors super nervous. Also, consumer spending isn’t as strong as it used to be, which means companies are making less money.
To put it in perspective, some big names like Bed Bath & Beyond and Revlon have already filed for bankruptcy this year. It’s like, even these well-known brands are struggling, so you can imagine how tough it is for smaller companies.
So yeah, the economic landscape is pretty wild right now, and it’s making life really hard for businesses across the board. Let’s hope things get better soon because this is totally not the vibe we want for the rest of 2024!
XOXO
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