Wall Street forecaster Danielle DiMartino Booth, CEO of QI Research, has issued a stark warning about the U.S. economy’s dangerous position.
She believes that the nation is on the verge of a corporate bankruptcy wave that could result in massive job losses, a direct consequence of the economic policies put in place under the Biden administration, often referred to as “Bidenomics.”
Booth’s research shows that the number of bankruptcies recorded over the past year has reached a troubling high, and she expects this trend to continue, leading to more job losses nationwide.
The situation is especially worrisome for large corporations, with nine companies valued at $50 million or more filing for bankruptcy this year alone.
This pace exceeds the peak of large corporate bankruptcy filings seen during the pandemic, which stood at 23.
"The trend right now is towards more [corporate] bankruptcies," RapidRatings CEO James Gellert says. "In Q1 of 2024, we had 43% more Chapter 11 filings than we had in Q1 of 2023." pic.twitter.com/ncWD2qGbsS
— Yahoo Finance (@YahooFinance) May 21, 2024
In a recent interview with David Lin, Booth stated her belief that “the bankruptcy cycle kicking into high gear is going to be enough to tame inflation.”
However, this potential inflation control comes at a steep price for American workers.
In the past six months, the economy has lost a whopping 1.5 million full-time jobs, replacing them with only 962,000 part-time positions. As Booth put it, “Americans Are Falling Behind.”
Small businesses, which make up 40% of the country’s jobs, are in a particularly precarious position.
Booth emphasized the growing uncertainty and challenges these businesses face, largely due to current policies that have made financing a significant obstacle.
The uncertainty index has skyrocketed, with small business owners worried about inflation, interest rates, and the political “overhang” surrounding the upcoming November elections.
The looming wave of corporate bankruptcies threatens to undercut the recent surge in nonfarm payrolls, which saw an impressive addition of 272,000 jobs in May.
BREAKING: In the first 4 months of 2024, the US has seen 210 corporate bankruptcies, 2nd highest number since 2012.
In April alone, S&P Global recorded 66 new bankruptcy filings.
This is up from 61 in March and is the 3rd highest monthly number since the 2020 pandemic.
The… pic.twitter.com/i9r9fGH1es
— The Kobeissi Letter (@KobeissiLetter) June 7, 2024
This resilience in the labor market, even as the unemployment rate edged up from 3.9% in April to 4% in May, may be short-lived in the face of the predicted bankruptcy surge.
As the country prepares for the impact of Bidenomics on the corporate landscape and job market, it’s becoming increasingly clear that the current administration’s policies have paved the way for a potentially devastating economic downturn.
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The looming threat of corporate bankruptcies and job losses serves as a harsh reminder of the unintended consequences of misguided economic strategies.
