Bankruptcy filings rise 30% in March
An increase in March bankruptcy filings is another indication that the U.S. economy is in recession, led by states where the housing boom turned to bust.
More than 90,000 bankruptcy filings were made in March, the highest since insolvency laws became more restrictive in October 2005, according to statistics compiled from court records by Jupiter ESources. Filings in March were 30% above the pace in 2007.
California led the nation with a 42% increase in bankruptcy filings at an annual pace in the first quarter, according to Jupiter ESources.
Rising bankruptcies, together with mounting foreclosures and fewer jobs, are further signs the biggest housing slump in a generation is hurting consumers and businesses. Federal Reserve Chairman Ben S. Bernanke this week for the first time acknowledged that the economy might be facing a recession and vowed to act to cushion the slowdown.
“We’re seeing fairly high readings in these measures of distress like bankruptcies, foreclosures and mortgage defaults,” said Chris Low, chief U.S. economist at FTN Financial in New York. The most affected states are “also where the most housing-related business growth was,” Low said.
The states most affected by the housing recession, including California, Nevada and Florida, were among those with the largest increases in bankruptcies.
They also are among states where unemployment rates exceed the national average. The jobless rate in California was 5.7% and Nevada’s was 5.5% in February. Nationally, 5.1% of workers were unemployed in March, the highest level since September 2005, the Labor Department reported Friday.
Tailing California’s 42% rate, Florida had a 35% increase in bankruptcy filings at an annual pace in the first quarter and Nevada saw a 32% rise, according to Oklahoma City-based Jupiter’s Automated Access to Court Electronic Records service.