Friday, July 25, 2008

Bankruptcy Blues

McClatchy News Service reported earlier this week that business bankruptcies 'jumped' forty-five percent in the first six months of 2oo8.
From April through June, 15,471 U.S. businesses called it quits, according to data from Automated Access to Court Electronic Records, an Oklahoma City bankruptcy management and data company.

States that saw the biggest increase in filings were Delaware, Montana, Oregon, Maryland and Connecticut, suggesting that the economic gloom is spreading beyond large population centers.

It was the 10th straight quarter that business bankruptcy filings have increased. Nearly 29,000 companies filed in the first half of 2008.

Another 60,000 to 90,000 others probably have closed, because roughly two to three businesses fold for every one that files for bankruptcy, said Jack Williams, resident scholar at the American Bankruptcy Institute.

Florida wasn't among those with the highest increases. But it does remain in the nation's top ten for the most bankruptcies, overall.

A number of local businesses across the toll bridge in Gulf Breeze are feeling the pinch of dramatically lower income and rising expenses. Owners tell us their customers are explaining frankly that they're cutting back on purchases because of rising fuel and food prices.

On the other hand, one Pensacola businessman we know, who depends on the health of other businesses across the services-and-goods spectrum, mentioned the other day that it seems to him Pensacola businesses are weathering the recession better than those in Gulf Breeze and Pensacola Beach. He didn't have any numbers, it was just an impression.

The only reasons for this we can imagine are (1) even if not at record levels, summer tourism, for now at least, is cushioning the down-turn at more tourist-friendly points but not in predominantly bedroom communities like Gulf Breeze that depend heavily on locals and have less to offer out of town visitors; or (2) our Pensacola friend is mistaken.

In any event, it's looking to us as if prospects for Northwest Florida's economy over the medium term are getting grimmer.

Change, anyone?

1 comment:

Anonymous said...

I am sure your stats are correct but people in Pensacola and surrounding areas are still spending money. Last night could not find parking spot on beach to go eat out and Sidelines and Peglegs are rarely slow. My business in town ( in construction no less) is doing quite well and are sales are up from last year. I do not feel Pensacola is doing that poorly compared to other areas. It seems that the folks who are doing the worst are ones who might have gotten in over their head when credit was easy to get and overspent what was prudent. I do not buy into all the media hype about how awful it is. I do not see it to the degree that the newspapers and media outlets portray.Does it occur to anyone that some businesses fail ( such as coffee shop in Gb by bridge) because they did not have sound business models in first place? or are in a bad location? Or are under capitalized? Businesses have been failing since our country was founded...this is not unusual. I think the market is making a correction that might have caught some people unaware. I feel for those losing their home but do not think it does anyone any good to focus entirely on the "bad" news while overlooking the good.