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Bankruptcy Filings, Foreclosures, Unemployment Soar

The numbers are in and they’re not looking good for the state of the American economy. First-quarter statistics on bankruptcy filings, foreclosure starts and unemployment figures suggest that the United States is continuing its slide toward a serious recession.

According to an article in the Los Angeles Times, 90,000 bankruptcy cases were filed in March. That figure apparently marks the highest number of bankruptcy filings since 2005, when new bankruptcy laws made filing bankruptcy more difficult than before. The stat also indicates a 30% jump from bankruptcy filings in March of 2007.

The Times, which gathers its data from Jupiter ESources, notes that bankruptcy filings aren’t the only things that have increased since a year ago. Foreclosures and unemployment, too, are creeping upward. And the states where the housing boom was biggest (including California, Nevada and Florida) are reportedly feeling the worst of the economic distress.

California’s bankruptcy rate has increased a walloping 42% since last year, sources indicate, and the state’s unemployment rate is 5.7%, the highest in the nation.

Nevada is evidently facing a 5.5% unemployment rate, still greater than the 5.1% national average. But even the national unemployment rate suggests troubling economic times: sources indicate that unemployment in the United States is higher than it’s been since September of 2005.

A recent Bloomberg report noted that foreclosures have increased 57% since 2007, and mentioned that the former boom states are (perhaps unsurprisingly) hardest hit. Nationally, one in every 538 homes is currently in foreclosure, according to sources.
Financial experts estimate that $460 billion worth of homes will go into foreclosure in 2008, which will mean even more homes on the already saturated market and a likely continuation of falling prices.

As if these figures weren’t dreary enough on their own, some economists are apparently predicting that this recession could last twice as long as a normal recession, plunging the country into economic turmoil for at least 20 months.

Reports also suggest that many homeowners have grown frustrated with falling home values and resetting mortgage payments, and many are finding themselves “underwater,” with “upside-down” loans, meaning that they owe more on their mortgage loan than their homes are currently worth.

This is leading to an increase in so-called “walkaways,” who opt to mail their keys back to their lenders and simply give up on their mortgages. While no reliable figures exist for the phenomenon, anecdotal reports suggest that it’s becoming more widespread.