With Ongoing Joblessness Bankruptcy Filings Near a 5-Year High

Unsurprisingly, an “improving” economy that doesn’t include any jobs growth isn’t going to help anyone pay their bills. As a result, bankruptcy filings continued to increase in May to one of the highest daily levels we’ve seen in about five years.

According to Reuters:

“There were 133,459 U.S. bankruptcy petitions filed in May, 10 percent more than a year earlier, according to preliminary data released Thursday by Automated Access to Court Electronic Records, or AACER.

“While filings fell 9 percent from April’s 146,209, this was because there were just 20 business days in May compared with 22 in April. Average filings per day edged up to 6,673 from 6,646. Experts say bankruptcies typically peak in an economic cycle between six and 18 months after an economy bottoms out. This is in part because many people and businesses seek other means to work off their debts before seeking court protection.

“U.S. gross domestic product rose at a 3 percent annual rate from January to March, the Commerce Department said last week, after a 5.6 percent growth pace in the fourth quarter of 2009. ‘Just because the economy gets better doesn’t mean that consumers can work off cascading debt problems that surfaced earlier,’ AACER President Mike Bickford said in an interview.”

Americans are still having difficulty paying off the years of debt they’ve racked up. This is especially true given the difficulties in the labor market. It remains tough to see how the economy is “recovering” when companies aren’t hiring and there’s too little work to go around.

You can visit Reuters to read more coverage of how the US bankruptcy filing rate is nearing a five-year high.

Best,

Rocky Vega,
The Daily Reckoning

The Daily Reckoning