We may be living in the worst time to be a small business owner. According to one of the biggest banks in the world, small businesses are declaring bankruptcy at a dramatic rate.
Small businesses across the United States are experiencing a surge in bankruptcies, surpassing levels not seen since 2020, and, according to a UBS note reviewed by The Epoch Times, conditions could become worse as the ripple effects from the recent banking crises begin to manifest.
The note from the UBS Evidence Lab shows private bankruptcy filings in 2023 have exceeded the highest point recorded during the early stages of the COVID-19 pandemic by a considerable amount. The four-week moving average for private filings in late February was 73 percent higher than in June 2020.
“[We] believe one of the more underappreciated signs of distress in U.S. corporate credit is already emanating from the small- and mid-size enterprises sector,” Matthew Mish, head of credit strategy at UBS, wrote in a recently published research note. “[The] smallest of firms [are] facing the most severe pressure from rising rates, persistent inflation and slowing growth.”
The industries hit hardest by the wave of bankruptcies include real estate, health care, chemicals, and retail outlets, according to the Swiss bank’s report.”
The news comes as CNN reports that “millions of jobs could be on the chopping block this year, as the Federal Reserve continues its rate-hiking campaign to tame inflation. But the effects of that action likely won’t reverberate evenly across the economy.
The Fed has seen some success: Inflation has cooled for eighth consecutive months, according to the February Consumer Price Index. The Producer Price Index shows a dramatic drop in wholesale prices in February. And the Fed’s favored inflation gauge, the Personal Consumption Expenditures price index, has also started to moderate.
But the job market has proved to be a formidable force, humming steadily in the face of climbing rates meant to slow its growth. After adding more than half a million jobs in January, the US economy then added 311,000 jobs in February, with an unemployment rate of 3.6% — just above a half-century low — according to the Bureau of Labor Statistics.”
The question appears to be moving away from whether we will have a recession and towards if the Biden administration is so committed to clinging to power that he’s willing to make the recession worse for short-term delays.