Bankruptcies among small businesses are increasing

mall businesses in the United States are experiencing an increase in bankruptcies. The main reasons are the Federal Reserve's monetary tightening to combat inflation and tightening credit conditions for large businesses and individual borrowers. Real estate, healthcare, chemicals, and retail outlets have been hit the hardest.

According to a UBS research note, small businesses in the United States are facing a surge in bankruptcies not seen since 2020, and the situation may worsen as the consequences of recent banking crises become apparent. According to the note, private bankruptcy filings in 2023 have surpassed the peak recorded during the early stages of the COVID pandemic, with real estate, health care, chemicals, and retail outlets bearing the brunt of the damage. The Federal Reserve's monetary tightening to combat inflationary pressures has largely contributed to the increase in bankruptcies, while credit conditions for large businesses and individual borrowers are also tightening. Monthly bankruptcy filings exceeded 31,000 in February 2023, an 18% increase from the previous year. The White House has downplayed the economic challenges, but the impending corporate income tax increase to 28 percent will exacerbate the difficulties faced by small businesses.

Source:
Liam Cosgrove, 1 April 2023, "Small Businesses File For Bankruptcy At Record Pace, Surpassing COVID Crash", Zerohedge, https://www.zerohedge.com/economics/small-businesses-file-bankruptcy-record-pace-surpassing-covid-crash?utm_source=