Bankruptcy filings in the US skyrocket

High interest rates and declining pandemic aid have caused the number of Americans and businesses filing for bankruptcy in 2023 to increase by 18% compared to the previous year.

Bankruptcy data provider Epiq AACER said the total number of bankruptcy filings in the US last year was more than 445,000, of which about 419,000 were filed by individuals.

Last year, American businesses and individuals faced high interest rates, tighter lending conditions and the end of pandemic aid. The number of corporate restructuring applications also increased 72% compared to 2022, to more than 6,500.

The wave of bankruptcies is expected to continue through 2024. However, the figures are still significantly lower than the 757,000 filings in 2019, before the pandemic.

"As expected, new bankruptcy filings in 2023 surged compared to 2022. We expect filings to continue to rise in 2024, as pandemic stimulus is gradually withdrawn, interest rates rise, and household debt levels approach record levels," said Michael Hunter, deputy director of Epiq AACER.

According to data from the Federal Reserve Bank of New York, US household debt was $17.3 trillion at the end of the third quarter of 2023. Delinquency rates are also rising, although they are still below pre-pandemic levels.

The Fed’s aggressive policy of raising interest rates to curb inflation over the past two years has caused financial markets to tighten significantly for businesses and households. Mortgage interest rates alone reached their highest level in more than 20 years in the second half of last year.

Since March 2022, the Fed has raised interest rates 11 times to curb inflation. The reference interest rate in the US is currently around 5.25-5.5%, the highest in 22 years.

However, since the last quarter of last year, borrowing costs and financial markets have gradually become more "breathable" for businesses and households. The reason is that the Fed kept interest rates unchanged throughout the second half of the year, at the same time signaling that the tightening process has ended and that the agency may reduce interest rates from next year.

Ha Thu (according to Reuters)

Source link: https://vnexpress.net/so-don-xin-pha-san-tai-my-tang-vot-4697041.html