What is the bankruptcy outlook for 2023? The financial markets have been volatile since February 2022, when a combination of factors led to struggles that hit American wallets. Wartime conflict, rising inflation rates, the residual pandemic impact, and staffing issues contribute to these concerns. In addition, the Fed’s decision to implement interest rate hikes to combat rising inflation has everyday impacts as well. So, as the New Year begins, here is some information about the bankruptcy outlook for 2023.
What Impacts Bankruptcy?
As we have seen, bankruptcies will be on the rise in 2022. These defaults affect individual consumers and businesses overwhelmed by the economy and other concerns. Several factors go into why someone might file for bankruptcy. Over the past year, supply chain issues, staffing concerns, inflation, and rising interest rates all play a role.
Pandemic and Supply Chain Issues
The effects of the Covid-19 pandemic continue to impact industries and individuals nearly three years after it began. When lockdowns were implemented to respond to the public health emergency, delays and blocks occurred in the supply chain across many industries. Production of goods and services halted, which also meant much higher prices to purchase them. Particularly at the height of the pandemic’s onset, bankruptcy became common as people and businesses alike struggled to stay afloat.
Staffing Concerns
Like the pandemic fallout, staffing concerns continue to contribute to the prevalence of bankruptcy now and in the future. Many companies struggle to attract or keep employees from retail to banking. This is due to a few reasons. Some people embraced what’s known as the “gig economy” after pandemic-related layoffs left them scrambling for cash. Others had to manage childcare when daycares and schools shut down, effectively removing them from the workforce. Staffing concerns affect individuals, especially small businesses, and the lack of reliable employees remains a threat.
Inflation and Rising Interest Rates
Amidst these concerns, there are other economic implications as well. Inflation has risen to about 7% over the past year, stretching the American dollar and wallets far beyond what many people can afford. By contrast, at the beginning of 2020, inflation was below 2%. With the current high inflation rate, it’s no surprise that many Americans are feeling the squeeze. Rising interest rates also mean that paying back debt will become even more difficult, leaving many to pursue a bankruptcy as a solution to start over.
Which Industries Will Be Affected?
Every industry has been affected by economic concerns and issues over the past several years. However, some are likely to feel the pain more than others. Retailers have given out large discounts to encourage consumption, but the result is less profit which in turn affects the bottom line. Several companies may be expected to restructure in 2023, so more Americans will be unemployed. In addition to retail, the automotive industry is also expected to struggle, especially due to lingering supply chain issues.
Filing For Bankruptcy? We Can Help
Are you considering filing for bankruptcy in 2023? The Law Offices of David Brunelle can help you navigate the process and make it as simple as possible. Call (413) 539-5959 to get started.