Source: Cailian News Author: Zhou Zi Yi
Over the past year, American companies have struggled with rising interest rates and tightening financial conditions, with an increasing number of bankruptcies. Danielle DiMartino Booth, a senior Wall Street forecaster, recently pointed out that a wave of large-scale bankruptcies is about to hit the U.S. economy. Booth expects more companies to start reducing recruitment and laying off employees, leading to an increase in the unemployment rate.
Danielle DiMartino Booth, a senior forecast analyst on Wall Street, recently pointed out that a wave of large-scale bankruptcies is about to hit the US economy, which could lead to more and more Americans losing their jobs.
Booth, CEO of market research institution QI Research, said in an interview that in the past year, the number of bankruptcies among American companies has been on the rise, indicating that many companies are struggling to cope with rising interest rates and tightening financial environments.
Previously, data from S&P Global showed that the number of bankruptcies among American companies increased by 88% in April this year compared to the beginning of the year. Booth pointed out that this is the highest monthly record of bankruptcies in the past 12 months, and expects this number to continue to rise.
Moreover, data also showed that nine companies with a market capitalization of more than $50 million have filed for bankruptcy this year, which is the fastest pace of large-scale bankruptcy filings since the outbreak of the pandemic. Booth predicts that by the end of June, the number of large-scale business bankruptcies will climb to 25, surpassing the peak of large business bankruptcies during the pandemic.
Booth also said in the interview, "I think the bankruptcy cycle entering high-speed operation will be enough to suppress inflation."
More layoffs.
Meanwhile, she also pointed out that in the past 12 months, about 1 million full-time workers have lost their jobs. Data shows that the US unemployment rate rose to 4% in May.
Small businesses are feeling the pressure of tighter financial environment and rising wages, and they are reducing recruitment and preparing for layoffs. According to a recent Small Business Optimism Index, 10% of small business employers say labor costs are their biggest consideration.
A recent survey by reemployment consulting firm Challenger, Gray & Christmas showed that 63,000 employers announced layoffs in May, and recruiting speeds have dropped to their lowest level since 2014.
Booth said, "This is a very dangerous period for small businesses, which create 40% of employment opportunities in the US." She expects more layoffs news in the coming months to hurt the economy.
Editor/Lambor