Job Cuts Due to Bankruptcy at Highest Level Since 2005

According to data published by Challenger, Gray & Christmas, 62,136 job cuts announced by US-based employers. In 2019 they were due to bankruptcy. That represents 10.5% of the 592,556 job cuts announced last year.

It should be noted that the total number of job cuts announced in 2019 was 10% higher than in 2018 and reached the highest level since 2015. It was the fourth largest number of job cuts since the financial crisis of 2008. Likewise, the increase in job cuts related to bankruptcy was mainly driven by retailers. In fact, the last time we saw job cuts due to bankruptcies at this level was in 2005, when 74,238 cuts were due to bankruptcies. That year, bankruptcy accounted for only 6.9% of job losses.

This is another sign of rot in the most vulnerable part of the United States economy.

Fake news

It is important to indicate that the labor market has been one of the jewels of the crown of Trump’s economy. Even so, as Peter Schiff indicated after the December employment report was better than expected, the employment news has been largely “falsified.”

In addition, experts continue to say that the unemployment rate is at a minimum of 50 years. Peter explained that this is not true. Fifty years ago, the methodology for calculating unemployment was very different from what it is today. If we were to calculate unemployment using the same statistical measure they used 50 years ago, the unemployment rate would certainly be well above 10%.

Meanwhile, the job creation we have seen since the Great Recession has been largely in low-wage sectors with high levels of part-time work. Employment growth has been mainly in government, medical care, retail, and other services, not in manufacturing.

The number of job cuts due to the bankruptcy of companies is another warning sign. Point out the underlying weakness in the economy. And with the number of leveraged companies, we could see a growing number of corporate bankruptcies in the coming years. Corporate debt has increased to record levels in the last 10 years. The issuance of bonds by US companies exceeded $ 1 billion each year of the decade that began on January 1, 2010.

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Source: SchiffGold