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Companies are going bankrupt at the fastest pace since the pandemic
By Filip De Mott,
9 days ago
Brooks Kraft/Corbis/Getty Images
Corporate bankruptcies are surging, with June notching the highest monthly level since 2020, S&P Global reported.
High interest rates, supply chain issues, and deteriorating consumer spending are fueling closures, it said.
Through June, year-to-year retail sale volumes fell 1.3% in the past three months.
A historic surge of corporate bankruptcies is hitting Wall Street, with this year's volume of filings already above levels seen in the past 13 years, S&P Global Intelligence reported.
According to a Monday report, June notched the highest level of monthly bankruptcies since 2020, when pandemic chaos drove a number of firms out of business. Tacking on last month's 75 filings, this year's total number of bankruptcies rose to 346.
While company-specific issues will often lend a hand towards a business' closure, S&P Global cited high interest rates, supply chain issues, and a consumer spending slowdown as today's major culprits.
When, earlier this year, hope was much stronger for a quick and significant reduction to interest rates, bankruptcies remained more subdued, S&P previously noted.
But bankruptcies started spiking to stand-out levels in April , the ratings agency reported, as it began to dawn on businesses that monetary policy would remain elevated for a while.
"If I were on the Fed, I would have argued for rate cuts at the end of last year," Moody's chief economist Mark Zandi told CNBC on Monday. "I think they're taking an increasing risk of putting too much pressure on the economy, financial system and ultimately, potentially breaking something."
Yet, deteriorating consumer spending is also grinding down on corporate prospects.
While pandemic stimulus set off a shopping spree that lasted across 2023, retail spending has gradually spiraled down: in the three months through June, year-to-year sales volumes fell 1.3% .
That's already weighing down on quarterly earnings reports, and forcing some retailers to become more creative, or face challenging decisions.
Among notable June bankruptcies tracked by S&P Global, were the electric vehicle maker Fisker, as well as Redbox DVD rental operator Chicken Soup for the Soul Entertainment.
The consumer discretionary sector is leading in bankruptcies this year, recording 55 total filings. That's followed by healthcare and industrials, S&P Global reported.
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