by Michael Snyder, The Economic Collapse Blog:
Why is the number of business bankruptcies in the United States rising so rapidly? It isn’t because the economy is doing well. Every day there are more news stories about businesses that have failed, and this is clearly reflected in the numbers that I am about to share with you. We haven’t seen anything like this since the Great Recession, and if our economic troubles continue to accelerate during the months ahead 2026 is going to be a very messy year.
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Earlier today I came across an article which explained that the number of small businesses that are filing for Subchapter V bankruptcy has set a brand new record high in 2025…
A six-year-old federal program designed to help the smallest American businesses cut debt and get a fresh start has set a record for the number of cases filed, court data show.
More than 2,200 people and small firms filed bankruptcy this year under the so-called Subchapter V rules, which make it cheaper and faster to win relief from creditors, according to data provider Epiq Bankruptcy Analytics.
“Creditors are just breathing down their necks,” said Carol Fox, a court-approved trustee who oversees more than two dozen cases filed in Southern Florida.
This is really bad news.
Small businesses are traditionally the primary engine for job growth in this country.
So the fact that so many of them are going belly up is not a good sign at all.
Meanwhile, large businesses are going bankrupt at a very alarming pace as well.
In fact, through the first seven months of this year the number of corporate bankruptcies in the United States was at the highest level that we have seen since the early days of the pandemic…
The U.S. saw a sharp increase in corporate bankruptcy filings in July, according to a recent report, reaching a post-COVID peak and placing 2025 on track to surpass last year’s total.
S&P Global Market Intelligence, the research and data arm of the credit-rating agency, found that filings by large public and private companies rose to 71 last month from 66 in June, marking the highest monthly tally since July 2020. So far in 2025, meanwhile, the total of 446 bankruptcy filings is the highest for this seven-month stretch since 2010.
When large numbers of businesses fail, hiring slows down and we typically see large scale layoffs all over the nation.
And that is precisely what is happening.
During a recent interview with Fox News, Nikki Haley’s son admitted that not a single one of his friends that recently graduated from college has been able to get a job…
“My friend group all graduated with great degrees in great schools, and not one of them has a job – not one. So it’s frustrating because they did everything that they were supposed to do. They put in the time, the effort, the money to get educated, and they don’t have a job to show for it. They have to compete with foreign workers who are willing to work for half their salary and AI, which is a supercomputer, so how can we compete with that?“
I was stunned when I read that.
I knew that things were bad for our recent college graduates, but I didn’t realize that they were this bad.
The job market is freezing up, and this is especially true for entry-level workers.
At this stage, AI is already doing much of the work that vast numbers of entry-level workers once did.
And a recent MIT study concluded that current AI technology could potentially replace 20 million more American workers…
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