Sep 9, 2020 - Economy

Bankruptcies highest since 2010, but trail Great Recession pace

Reproduced from S&P Global Market Intelligence; Chart: Axios Visuals
Reproduced from S&P Global Market Intelligence; Chart: Axios Visuals

U.S. corporate bankruptcies have risen in 2020 — already reaching the highest number at this point in the year since 2010 — but the pace remains well behind what was seen during the Great Recession.

Why it matters: The increased pace of bankruptcies has grabbed headlines in light of the coronavirus pandemic, but is quaint compared to what took place from 2007–2009. In fact, there have been fewer bankruptcies so far in 2020 than in 2006 and in 2005, according to data from S&P Global Market Intelligence.

By the numbers: A total of 470 companies have gone bankrupt as of Sept. 7.

  • However, there were 608 bankruptcies through Sept. 7, 2010.
  • 1,108 bankruptcies by Sept. 7, 2006.
  • 610 bankruptcies by Sept. 7, 2005.

There were 2,747 bankruptcies through Sept. 7 and 4,095 by year-end in 2007; 3,247 through Sept. 7 and 5,268 by year-end in 2008; and 4,025 through Sept. 7 and 4,988 by year-end in 2009.

What to watch: The reduced number of bankruptcies is good for individual companies but is largely a result of the Fed flooding markets with liquidity and keeping U.S. interest rates at extremely low levels.

  • That is allowing inefficient companies to stay in business and weighing down overall U.S. productivity, many economists argue.
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