Small Business Bankruptcies Are at Their Highest Since the 2008 Crisis

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The American economy is sounding alarm bells as a dramatic surge in commercial bankruptcies paints a troubling picture for the future. In the first half of 2024, subchapter V elections within Chapter 11—specifically designed for small businesses—have skyrocketed by a staggering 61% compared to the same period last year. This surge is more than just a statistic; it’s a harbinger of distress that should send shockwaves through the business community and beyond.

Retail bankruptcies are particularly alarming, with 26 companies filing for bankruptcy year-to-date—almost matching the total number for all of 2023. This marks the third-highest level since 2011, when 30 retail firms declared bankruptcy during the same timeframe. The implications are dire, highlighting an industry in turmoil that could have far-reaching effects on employment and consumer choice.

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The situation is equally alarming on the individual front, with personal bankruptcies climbing by 15%. This dual crisis reflects the mounting economic pressures faced by both businesses and households, driven by a trifecta of factors: soaring consumer debt levels, elevated interest rates, and relentless increases in living costs. The ramifications of these trends are profound and far-reaching.

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Sources:

https://themortgagepoint.com/2024/07/03/bankruptcy-breakdown-commercial-individual-bankruptcies-up-in-first-half-of-year/

https://projects.propublica.org/graphics/bankruptcy-data-analysis