The US economy has been hit by a fresh wave of bankruptcy filings, which has surged to their highest level since 2020 Covid-19 pandemic, when similar situations were seen across the country. A report in Business Insider mentioned that several popular brands of 1990s and 2000s brands were among the companies that have filed for bankruptcy, continuing a trend that lays open the status of the United States’ economy.
Data from S&P 500 Global showed that this summer, the number of filing for US corporate bankruptcy surpassed the level of 2020, the Business Insider report mentioned. A total of 71 public and private companies filed for bankruptcy last month, which is 8 more than June when 63 companies had filed for bankruptcy.
Which companies have filed for bankruptcy?
According to the report, the companies include some beloved brands like Forever 21 and Joann. Many other famous retailers are forced to shut their stores to reduce physical footprint amid loss. While the US stock market has been standing tall to any economic upheaval with 3% economic growth in the second quarter, some experts said July is rather stressful, the report mentioned.
“Companies are contending with elevated interest rates as uncertainty from US tariff policy pressures costs and supply chain resilience,” S&P 500 Global said, Insider quoted.
Companies like Canned goods producer Del Monte Foods filed for Chapter 11 bankruptcy, as they witnessed reduced demand and high inventory costs. Their leadership reportedly also cited a heavy debt burden. Last month, a Business Insider report had claimed that Del Monte had combined debts of between $1 billion and $10 billion.
Will August be as tense as July for the US?
The numbers from July were not at all positive and hence, there are apprehensions that with no improvement so far, August may paint a similar picture. The report said that a few prominent companies have already filed for bankruptcy in August, including fashion retailer Claire’s.
Claire’s submitted its second Chapter 11 filing on August 6, also citing declining demand and high interest rates, putting it in the likes of Forever 21, Rite Aid, and Party City.
What made the story more painful is the fact that all these brands once ruled the market, with numerous retail chains. Now they have closed several of their physical stores this year.
US President Donald Trump has said that his strategy to put tariffs on the imports of the products from other countries would held America in getting money that would boost the economy. A top member of Trump’s cabinet also said that the amount that the US would receive from these tariffs, would be used to pay off the debt to lessen the burden from the Americans.