Economy Archive

Commercial bankruptcies have skyrocketed since the historical lows during the height of the pandemic. At 236 corporate bankruptcy filings so far this year, the number is higher than the first four months of any year since 2010 and more than double 2022 levels, according to S&P Global Market Intelligence. They forecast that the U.S. default rate will rise to 4.25% by the beginning of next year, up from 2.5% currently—or to 6.5% if there is a serious recession.

Treasury officials have warned lawmakers to come to an agreement prior to the X-date of when reserves will run dry. The X-date depends on both tax collections and government payments, and if there is not enough money to provide for the country’s financial obligations, the likelihood of a default is very high.

Bankruptcies remain top of mind as commercial Chapter 11 and Subchapter V filings have increased significantly over the past few months. Small business Subchapter V’s increased 81% year-over-year in April and commercial Chapter 11 filings were up 32%, per Epiq Bankruptcy.

All eyes are on the economy as business leaders wait to see if the Federal Reserve will push the U.S. into a recession or pull off a soft landing. Opinions about the outcome are somewhat mixed—Oxford Economics predicts a “mild recession” come 2023; Goldman Sachs says the U.S. remains on a “narrow path” to a soft landing; and TD Securities puts the chance of a recession at 50% in the next 18 months.