Mark Zandi, Chief Economist at Moody’s, gave a talk entitled the Two-Handed Economist. He said that my task is to give you the horizons for the economy.
The Bankruptcy Forecast
He said we currently have a good economy. Bankruptcies are steadily declining. Personal bankruptcies maxed out at 1.5 million during the financial crisis; today they are down to 750,000 per year. At the
peak of the financial crisis, there were 60,000 business bankruptcies per year; now we are down to
20,000. He said that we’ve hit bottom and he would expect both personal and business
bankruptcies to increase. Business bankruptcies will rise
substantively greater than personal bankruptcies because personal households have done a better job of
deleveraging. Personal bankruptcies will increase but relatively
modestly. Non-financial corporations have
now substantially levered up and underwriting
has weakened. Mr. Zandi said, that is a prescription for
financial problems when the economy does not cooperate. He told the bankruptcy professionals in the room that "going forward you will be a lot busier."
The Bankruptcy Forecast
He said we currently have a good economy. Bankruptcies are steadily declining. Personal bankruptcies maxed out at 1.5 million during the financial crisis; today they are down to 750,000 per year. At the
peak of the financial crisis, there were 60,000 business bankruptcies per year; now we are down to
20,000. He said that we’ve hit bottom and he would expect both personal and business
bankruptcies to increase. Business bankruptcies will rise
substantively greater than personal bankruptcies because personal households have done a better job of
deleveraging. Personal bankruptcies will increase but relatively
modestly. Non-financial corporations have
now substantially levered up and underwriting
has weakened. Mr. Zandi said, that is a prescription for
financial problems when the economy does not cooperate. He told the bankruptcy professionals in the room that "going forward you will be a lot busier."
