Bankruptcies are exploding across the economy

[ergophobe]

https://www.businessinsider.com/bankruptcies-across-economy-small-business-households-corporate-2025-12

[rcjordan]

Jenga comes to mind.

[Brad]

It seems like every day I see headlines about restaurant and retail chains either going bankrupt or closing hundreds of stores.  It's not a sign of economic health although it might open up some opportunities for locally owned mom and pops.

[rcjordan]

>restaurant

Q: I wonder if consumers are downgrading to fast food?

A: Apparently not;
Fast-food sales are weak, even as overall restaurant sales thrive
https://www.restaurantbusinessonline.com/financing/fast-food-sales-are-weak-even-overall-restaurant-sales-thrive

Debbie is hopeful that the steady drumbeat of "Ultra-processed foods will kill you! Restaurants are top offenders." is having some effect. (But hope + $8 will get you a coffee at Starbucks.)

[ergophobe]

>> restaurantbusinessonline.com

Now THAT's an rcjordan link!

> up 5.7% year to date.

My subjective impression is that non-fast-food restaurant prices have risen much faster than inflation, while fast food restaurants have tried to hold the line in other ways - our local Taco Bell almost never has someone working the register anymore, for example.

So with 3% overall inflation, I'm not sure a 5.7% in non-fast-food restaurants indicates much of a change in actual sales in either direction.

> headlines about restaurant and retail chains

True, but we have a bias there. Remember a few years ago we were sharing all those headlines in a recession thread, but the recession didn't come. Economists and media analysts warned that when Google lays off 10,000 employees, it's a headline. When 1000 small companies hire 10 people each, it doesn't show up.

[Brad]

>fast food

Related.

When Did Fast Food Architecture Get So Bad?

https://youtu.be/1EiPm8AYH7I?si=3-7Ux__16dg6St6D

They all look the same.

[rcjordan]

>rcjordan link

Pretty simple kw string, really, with just a touch of finance jargon. (and knowing that 4th quarter results wouldn't find much more than guesswork)

3rd quarter fast food sales 2025

[ergophobe]

Related

Home Depot CEO sounds alarm on troubling customer trend in stores

Home Depot CEO Ted Decker said that the company's weak performance during the quarter was "primarily due to the lack of storms," which impacted multiple areas of the business such as, plywood, roofing and power generation sales.

https://www.thestreet.com/investing/home-depot-ceo-sounds-alarm-on-troubling-customer-trend-in-stores

Debbie asks: Are you sure about that causation Ted?

[rcjordan]

Placing blame elsewhere?

"We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand," Home Depot CEO Ted Decker said in a statement.

/r says: Home Depot continues to support GOP candidates & conservative groups. It's founders, Marcus and Langone, donated heavily to Trump.

Home Depot issues dire warning on housing market, economy
https://finance.yahoo.com/news/home-depot-issues-warning-housing-053300208.html

[Brad]

>blame

For awhile there the headlines were all about ICE raids at Home Depot stores.  I never saw news stories about raids at Menard's and few about Lowe's, seems like it was always Home Depot.  That has to have had a chilling effect.

[Drastic]

"How U.S. consumers are battling tariffs in 2025:

    Approximately 87% of consumers are concerned about the impact of tariffs on their finances or shopping, while 63% are worried that tariffs will raise the price of everyday goods.

    Also, 82% of consumers plan to change their shopping habits in response to tariffs, which includes cutting back on nonessential spending, searching for sales or coupons, delaying nonessential or big-ticket purchases and switching to lower-priced retailers or discount stores.

    In addition, 77% are concerned about a recession within the next year.
        Source: Numerator"

Wow. Nothing confirms a recession like the public bracing for it.

[rcjordan]

>Nothing confirms a recession like the public bracing for it

That's in part because the bracing reinforces & amplifies the contributing factors.

[ergophobe]

> bracing

For a bit of cheery, light reading, I'm reading Andrew Ross Sorkin's 1929.

What's interesting is that in 1929, most fundamentals were good. There was a *stock* bubble, but manufacturing was humming along and consumers were responding by buying what was made and exports were healthy. If not for the ability to buy stocks with 10% down, using the stock as collateral on your loan, and banks lending out way way more than they had in assets, it was actually a well-grounded economy. The government was even running a *surplus* through 1930 (which was a key mistake on Hoover's part BTW). By most measures, it was a stronger, more stable, broader economy than the one we have now.

Then came the year of mass delusion when everyone wanted to get in on the market. One famous investor pulled out when he heard shoeshine boys giving stock tips. A famous astrologer was a major market mover. Even Winston Churchill, on a trip through the US and Canada in 1929, borrowed $5000 from a friend and then bought stock on margin, so effectively putting 0% down and telling his wife they were soon to be rich (Churchill was broke - like Theodore Roosevelt, he made his living as a writer and was always one publishing contract away from failing to make his payments).

But then things start to go wrong. First there's the "crash" which wasn't that much of a crash. The worst day in stock market history didn't come until a couple years later. And by December the market was only down 17% for the year. By the spring of 1930, the worst was over and people were flooding back into the market on a "buy low, sell high" strategy. But it kept going lower. And lower. And lower.

But the thing that deviled the Hoover administration is they just could not restore confidence. The bank runs started with a false rumor, but it brought the first bank down. Then they started falling at over 500 failures a year. One day 40 banks failed across multiple states.

In the end, the powerful belief that only a fool wouldn't buy stocks on margin and make himself wealthy gave way to a belief that only a fool would leave money in the bank. Even banks that should have been sound, went belly up.

The biggest parallel to today, though, is the propensity of the Hoover administration to keep telling people, that if they just look at the numbers, the economy is actually quite good. If you think it's bad, it's that you aren't paying attention. The Biden/Harris campaign was guilty of this and now I see the same from Trump.

But Hoover had a once-in-history (hopefully) tin ear. I response millions being unemployed, he attempted to rally the country by explaining that this only represented two million households and that, because recent data showed that households commonly had more than one breadwinner, this meant there were only 1.5 million (I'm not sure that's the right number) households with no breadwinner. So, see y'all, the economy is actually pretty damned good. Be grateful.

One thing that emerges is to double-underline and highlight that an economy is more about the story people tell than anything else. Once you have a stubborn negative story, combatting that is extremely hard.

Fun fact: by election day in 1932, two-thirds of Americans thought the economy was improving. Hoover should have won on the strength of that sentiment. In fact, he had actively sabotaged the campaign of another Democrat because he thought Roosevelt would  be easy to defeat due to his health problems (and thought he wouldn't survive a year in the White House)..

But 83% were against Prohibition, which turned out to be a key issue that swung the election.