These kinds of businesses are driving a surge in US corporate bankruptcies
CNN
Small and mid-sized businesses are struggling to survive. Many have already gone under water this year.
Small and mid-sized businesses are struggling to survive. Many have already gone under water this year. There were 346 companies that filed to either liquidate or re-organize through bankruptcy in the first six months of 2024, the highest half-year level since 2010 when 467 filed, according to data from S&P Global Market Intelligence. Just last month, 75 companies filed for bankruptcy, which was the biggest monthly total since early 2020. The majority of businesses that have gone belly up are considered “consumer discretionary,” a broad category of firms that sell goods or services that people don’t need every day, such as restaurants, clothing stores and car dealerships. Most of the businesses are also considered small or mid-sized, economists and investors tell CNN. Interest rates are at their highest level in nearly a quarter century, which is squeezing not just for consumers, but also businesses that rely heavily on borrowing to purchase equipment, replenish inventory, meet payroll and/or expand operations, to name a few key reasons. Access to credit is especially crucial for small, private businesses that aren’t able raise money through financial markets. It’s also gotten harder for them to even take out a business loan to begin with these days. A recent Federal Reserve Bank of Kansas City survey of 170 small businesses showed that “credit standards tightened for the tenth consecutive quarter and credit quality decreased.” “Small companies are more at risk and more sensitive to higher borrowing costs,” Matt Rowe, head of portfolio management and cross asset strategies at Nomura Capital Management, told CNN. “The increase in implied and actual defaults that the S&P report is referencing is largely coming from the smaller cap part of the world.” Consumer demand has also been underwhelming so far this summer, according to the Institute for Supply Management’s latest survey of businesses that sell any kind of service. The latest spending data and comments from retailers in recent months have also demonstrated that US consumers aren’t splurging this summer, unlike last year, and are instead spending more cautiously.
Nippon Steel is expected to re-file its application for a national security review by American regulators of its $15 billion takeover bid of US Steel, sources familiar with the matter told CNN on Tuesday, buying Japan’s largest steelmaker an additional 90 days to close its acquisition of an American rival after political opposition emerged in an election year.
So far, the attacks that targeted Iran-backed Lebanese militant group Hezbollah members through their pagers have had devastating consequences. At least nine people, including an eight-year-old girl, were killed, and at least 2,800 were wounded. Over 150 of those injured are in critical condition, according to the Lebanese health minister.