These kinds of businesses are driving a surge in US corporate bankruptcies

Small and mid-sized businesses are facing difficulties as an increasing number of them file for bankruptcy. In the first half of 2024, 346 companies filed for liquidation or reorganization, the highest number in a half-year period since 2010. The majority of these businesses fall under the consumer discretionary category, such as restaurants, clothing stores, and car dealerships. The tightening of credit standards and decreased credit quality has made it harder for small businesses to access loans. Additionally, consumer demand has been lackluster this summer, leading to a decline in spending. However, experts believe this may be a result of the economy normalizing after the pandemic. Despite the rise in bankruptcies, there has also been an increase in new business applications. The Federal Reserve’s plan to cut interest rates later this year may provide some relief to struggling businesses.