In the second quarter this year, 75 U.S. companies with more than $50 million each in liabilities filed for bankruptcy. Only the first quarter of 2009 saw more filings, according to Bloomberg data that goes back to 2003. In total, 126 firms have filed for bankruptcy this year.
Retailers were the hardest hit with 16 filings. Energy wasn’t far behind as bankruptcies increased to a pace not seen since 2016, when oil prices collapsed. And if oil prices remain weak, it will likely get worse.
Bloomberg said there was $348 billion worth of distressed bonds and loans at the end of June. This could be a signal of more trouble ahead.
Along those same lines, the state of the economy has unleashed a series of budget busters to states. Crashing tax revenues, the increasing costs of the social safety net, and unemployment benefits are taking a big toll on state finances throughout the nation.
According to the Tax Policy Center, 27 states are looking at $80 billion in lost tax revenue for the 2021 fiscal year, which started in July. Personal income and sales taxes account for 67 percent of revenues in those 27 states, and both those sources will be hard hit over the next fiscal year.
So, it appears corporate America and local economies have something in common – losing money.