Insolvencies expected to decrease further, but downside risks have increased
In 2018 many US businesses benefited from robust economic growth, tax reforms and buoyed business confidence, leading to a 4% decrease in corporate insolvencies.
However, despite a still solid GDP growth outlook risks for the corporate sector are increasing in 2019. The strengthening USD and potential trade barriers strain US exporters. Domestically, changing shopping patterns, especially the shift away from mall shopping, has already caused major bankruptcies in the retail sector – a pattern which should persist in the coming years. Additionally, higher interest rates are increasingly making financing more expensive. Therefore, US business insolvencies are forecast to decrease only 2% or to level off in 2019.