Wall Street analyst Danielle DiMartino Booth says that a wave of big bankruptcies is coming to the US economy, which could cause more and more Americans to lose their jobs.
The CEO of QI Research pointed to the rise in corporate bankruptcy filings over the past year as proof that companies are having a hard time with the new financial rules and higher interest rates. S&P Global data shows that the number of bankruptcies rose 88% from April of last year to April of this year.
That’s the most bankruptcies that have been recorded in the past year, and Booth said that number should keep going up.
Nine businesses worth $50 million or more have gone bankrupt so far this year. This is the fastest rate of large companies going bankrupt since the pandemic. Booth thought that the number of big bankruptcies would reach 25 by the end of June, which would be more than the highest number of big company failures during the pandemic.
Booth recently told the David Lin Report, “I think that the bankruptcy cycle getting into high gear will be enough to stop inflation.” “When big companies go bankrupt, liquidate, or something similar, they do lose money.” “A complete loss of your pay,” she told him.
The job market in the US is still strong, but the jobless rate has gone up to 4%. Booth also said that over the last year, the country has lost about a million full-time workers.
Tougher economic times and higher pay are also putting pressure on small businesses. The latest Small Business Optimism Index shows that 10% of small business owners said that the cost of labor was their “single most important problem.”
Businesses have made it clear that they are not hiring as many people and are ready to cut jobs. A study from Challenger, Gray, and Christmas says that hiring slowed to its slowest rate so far this year since 2014, and another 63,000 employers said they were going to lay off workers in May.
“Very precarious times for the small businesses that produce 40% of the jobs in America,” Booth noted.
Booth has said before that the economy is already in a recession because the job market is so weak. She said that one measure of unemployment showed that the job market went into recession in October of last year and that she expected more people to lose their jobs in the coming months.
Source: Business Insider
