U.S. corporate bankruptcies reach 14-year high

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The United States is experiencing a wave of corporate bankruptcies not seen since the aftermath of the global financial crisis, with filings reaching a 14-year high in 2024. Consumer-focused companies, including major retailers like Party City, have been particularly vulnerable to the ongoing pressures of inflation and weak spending, leading to a surge in bankruptcies across the nation.

According to the latest data from S&P Global Market Intelligence, at least 686 companies filed for bankruptcy last year—a stark 8% increase from 2023, the highest number since 2010. This alarming rise signals the intense financial strain that high-interest rates and sluggish consumer demand are placing on businesses struggling to stay afloat.

One of the most troubling statistics is the growing number of high-profile failures. Party City, for example, filed for its second bankruptcy in just two years in December 2024, forcing the closure of all 700 stores across the U.S. Other notable casualties include Tupperware, Red Lobster, Spirit Airlines, and Avon Products, all grappling with shrinking consumer demand and rising operational costs.

The most shocking detail is the scale of financial collapse. At least 30 companies that filed for bankruptcy reported liabilities exceeding $1 billion at the time of their filings. This paints a dire picture of the financial strain that many businesses are enduring, particularly those burdened with excessive debt.

The connection between the Federal Reserve’s interest rate hikes and corporate bankruptcies is undeniable. The Fed’s aggressive rate increases have significantly driven up borrowing costs, intensifying financial stress for many companies. While the central bank began easing rates slightly in late 2024, officials have signaled that future reductions in 2025 will be limited to just half a percentage point. This means businesses will continue to face elevated borrowing costs, leaving many in an even more precarious position.

This surge in bankruptcies is a stark reminder of the fragile state of the U.S. economy, where both inflation and interest rates have created a perfect storm, pushing many companies to the brink. As these financial pressures persist, the broader implications for jobs, supply chains, and local economies could be far-reaching, leaving countless communities at risk.

US corporate bankruptcies in 2024 surged to 686, an 8% rise from 2023 and the highest since 2010, when 828 filings were recorded. Elevated interest rates and weakened consumer demand are hurting struggling companies, according to S&P Global Market Intelligence. pic.twitter.com/JZfZd674ej

— BigBreakingWire (@BigBreakingWire) January 7, 2025