by Michael Snyder, The Economic Collapse Blog:
I am so alarmed by the economic numbers that have been coming out recently. I wrote about some of them in an article that I posted yesterday, and I am going to write about some more of them today. Ever since the end of the Great Recession, Americans have been piling up debt at a staggering pace, and now that debt bubble is starting to implode. There isn’t really a precedent for this, and so we can’t look back at past events in order to project what will happen next. But it should be obvious to all of us that things will soon start getting really bad in this country.
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It was only a matter of time before bankruptcies began to soar, and according to CBS News that is precisely what is happening…
The end of federal pandemic aid is putting many Americans and businesses under mounting financial pressure, leading to a spike in bankruptcies.
Total bankruptcy filings in January shot up 19% in January to 31,087, up 19% from a year ago, according to data from Epiq, a legal research firm. The number of Americans who filed for bankruptcy across Chapters 7, 11 and 13 shot up 20% in January from a year ago.
I am particularly concerned about the number of large companies that are now being forced into bankruptcy. According to Zero Hedge, large companies are filing for bankruptcy at the fastest pace that we have seen since the days of the Great Recession…
The spike in defaults was not a fluke, and according to Bloomberg data, one month later – as of the end of February – no less than 39 large companies had filed for bankruptcy in the US so far this year, as February’s pace matches that of January; the YTD total represents the fastest pace of companies filing for bankruptcy since the immediate aftermath of the global financial crisis in 2009.
As I keep warning, one sector to keep a very close eye on is commercial real estate.
In September 2021, PIMCO acquired Columbia Property Trust Inc. in a blockbuster multi-billion dollar deal…
In September that year, Pacific Investment Management Co. said it was acquiring Columbia Property Trust Inc., which owned 19 office buildings in New York, San Francisco, Washington, D.C., and other cities. The deal valued Columbia at $3.9 billion.
But now here we are less than two years later and Columbia is failing.
In fact, it has just defaulted “on more than $1.7 billion of debt backed by seven of its buildings”…
Columbia has now defaulted on more than $1.7 billion of debt backed by seven of its buildings, according to people familiar with the matter, which makes it one of the biggest office defaults during the pandemic period.
This is just the beginning.
We really are on the brink of the worst commercial real estate crisis in U.S. history, and it is going to be a complete and utter nightmare.
Meanwhile, U.S. consumers are also drowning in debt like never before.
Over the past couple of years, vehicle prices have escalated dramatically, and at this point millions of Americans are making monthly vehicle payments “of $1,000 or more”…
For the typical American, a new car is increasingly out of reach. Today, about two out of 13 people are making monthly car payments of $1,000 or more. For many, there’s no choice: They have few or no public transportation options and need a car to get to work, bring children to school and buy groceries.
I couldn’t imagine paying over $1,000 a month on a vehicle.
That is insane.
But this is the reality of living in this day and age.
As Steve Cortes has pointed out, Americans have also accumulated more than a trillion dollars in credit card debt…
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