The United States witnessed a significant surge in bankruptcy filings in 2023, with an overall increase of 18%, according to Reuters. This upswing has been largely attributed to the confluence of several economic factors, primarily post-pandemic economic changes and rising interest rates. Consumer bankruptcy filings mirrored this trend with an identical 18% rise, indicative of the widespread impact across various sectors.
Contributing Economic Factors
Economic Downturn and High Interest Rates: The economic downturn, coupled with high interest rates and inflation, has been a primary driver behind the increase in bankruptcy filings. The low-interest-rate environment in preceding years had encouraged extensive borrowing and risk-taking, leading to financial stress when the economic landscape shifted.