Individual bankruptcies are falling. But that doesn’t say much for the U.S. consumer, who’s still supported by record government stimulus. Before last week’s dismal unemployment report, there was some seemingly bright news for U.S. households. Consumer bankruptcies plummeted 8% in the first half of this year compared to 2010, said the American Bankruptcy Institute. Roughly 709,000 Americans declared insolvency.On the surface this augurs well for households — and for the U.S. economy dependent on their spending. Along with declining credit card delinquencies and falling bank loan missed payments, it suggests consumer finances are improving. But the headline hides a scary truth: U.S. households are still precariously indebted. The government is propping up their balance sheets at record levels. And a number of Americans are avoiding bankruptcy by skipping their mortgage payments.
“The number of bankruptcies is still unacceptably high,” says David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto, who thinks there’s a 99% chance the U.S. is headed for another recession in 2012. “It is not a good number even if it’s fallen from its peak.”
More on this story – CNNMoney
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