US bankruptcies are on the rise, with 275 large companies filing for bankruptcy through May of 2024, marking the second-highest number since 2010. This trend reflects economic weakness and raises concerns about a potential recession, especially for companies producing goods that consumers may want but likely do not need as spending decreases.
In 2023, 637 bankruptcies were declared, the highest count in 14 years, and in May 2024 alone, 62 companies officially declared insolvency.
Economic indicators point to significant issues – GDP growth slowed to 1.3% in the first quarter of 2024, inflation has been above 3% for 38 months, the state deficit is $2 trillion, and the national debt is $34.6 trillion.
Achieving a “soft landing” remains a challenge for the Federal Reserve given the delayed effects of raising interest rates and reducing the balance sheet. The sharp increase in bankruptcies, along with a record credit card debt of $1 trillion and rising delinquency rates, further complicates the economic outlook.
Without additional government intervention, a recession seems increasingly likely, prompting businesses and consumers to prepare for challenging times ahead.