Bob Nardelli, the former CEO of Home Depot, is warning about more bankruptcies hitting the U.S. economy, and blames lawmakers for their delay in coming to terms regarding the country’s debt ceiling.
Nardelli also blamed Congress’ inability to work together to raise the U.S. debt limit as creating a burden on businesses, saying that he is “definitely worried” about the situation.
The former Home Depot CEO says he is seeing “inventory builds” in a lot of public and private businesses. He pointed to the 2007–09 period when the banking meltdown took “everything down.”
Surge in Bankruptcy FilingsBankruptcy filings across the United States rose for the third straight month in March in all major industries. A total of 42,368 new bankruptcies were filed last month, according to data from Epiq Bankruptcy, a provider of U.S. bankruptcy court data, technology, and services.
This is 17 percent up from the 36,068 filings in March 2022 and is the highest number of monthly bankruptcy filings since April 2021.
Data from S&P Global Market Intelligence showed 71 corporate bankruptcy petitions in March, a jump from 58 in the previous month. This is the highest monthly total since July 2020 and the fourth straight month of increases.
Bank Lending Dips, LayoffsMeanwhile, lending activity by banks suffered the biggest plunge ever in the two weeks ending March 29. Commercial lending in the country declined by $105 billion during this period—the highest since 1973. The collapse in lending was led by declining real estate loans as well as industrial and commercial loans.
Indication of an incoming credit crunch was seen in the latest Survey of Consumer Expectations (SCE) by the New York Federal Reserve.
“Respondents were more pessimistic about future credit availability as well, with the share of households expecting it will be harder to obtain credit a year from now also rising.”
Besides the credit crunch, there has been a quadrupling in worker layoffs.
The first quarter of 2023 saw job cuts rise by 396 percent compared to the same period a year ago, according to an April report by outplacement firm Challenger, Gray & Christmas, Inc. The total number of job cuts announced by U.S.-based employers during this period came in at 270,416, which is the highest first-quarter number since 2020.
The number-one reason cited by companies for the job cuts was market or economic conditions, followed by cost-cutting in second place.
Billions of dollars have flown out from domestically chartered commercial banks in the country following the SVB collapse on March 10. Between the week ending March 8 and April 5, deposits have fallen from $16,249.9 billion to $15,996.7 billion—a decline of $253.2 billion, based on the latest numbers from the Fed.