Most businesses that failed this year come from one sector of the economy

Small and mid-sized businesses are facing significant challenges as many struggle to stay afloat. The first half of 2024 saw a high number of companies filing for bankruptcy, with 346 filings, the highest since 2010. Last month, 75 companies filed for bankruptcy, the largest monthly total since early 2020. Most of the businesses affected are in the consumer discretionary category, such as restaurants, clothing stores, and car dealerships. The tightening of credit standards and decreased credit quality are also contributing factors. Additionally, consumer demand has been underwhelming compared to last year. However, experts believe that these challenges may be a result of the normalization process after the pandemic, rather than indicative of future economic trouble. To alleviate some of the pressure on businesses, the Federal Reserve is expected to cut interest rates this year. Despite the challenges, new businesses continue to be formed, providing some optimism for the future.