Wednesday, November 11, 2009

Business Bankruptcy Filings Continue to Rise in Lockstep with Unemployment

The United States business bankruptcy rate continues to be tightly correlated to the unemployment rate. As Exhibit 1 shows, business bankruptcy filings climbed an average of 12% per quarter from the 4th quarter of 2007 until mid-year 2009, compared to a 11% average quarterly increase for the unemployment rate over the same period. In the third quarter of 2009, the quarterly unemployment rate increase slowed considerably. (Click on slide to enlarge)

As the business bankruptcy rate is tightly correlated to the unemployment rate, expect a continued increase in bankruptcy filings until the unemployment rate improves.

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