Despite a pandemic, 2020 bankruptcies fell in Arizona & U.S.
Feb. 24, 2021
George Hammond, an Economic and Business Research Center Director at the University of Arizona’s Eller College of Management talked with us about bankruptcy during 2020. Bankruptcies fell in the US and Arizona in 2020 despite the pandemic. George Hammond says one reason could be the strength of our economy at the time of the pandemic.
Hammond said Arizona bankruptcies filled by about 20% last year. It was a big decline and such a big surprise with what went on last year. He thinks what is going on was the impact and influence of the Care Act on Arizona’s economy. The cares act included the paycheck protection program, The economic recovery rebates, the extended UI program, and more. He said that funneled about $30 billion into the state economy.
Arizona’s personal income in the second quarter of last year went up by over 13% and 10% in the third quarter, Hammond said. He thinks the care act really helped Arizonian get through what was going on with the pandemic and not file bankruptcy. In Arizona and nationally the majority of bankruptcies are personal. Personal bankruptcies and business bankruptcies were down significantly in 2020, he said. Hammond said across most states bankruptcy looks better than expected and he thinks that’s because of the cares act.
We talk about what we want to keep in mind as we go forward in 2021, which is that the federal relief will eventually stop. He said the rent and mortgage have just piled up but it is still due. Hammond said there will be a large bill to pay at some point, and that is when he thinks they will see bankruptcies trend upward again. We ask if there is a balancing out that will be happening in the future. Hammond, we probably will see that. He said Covid is less like a recession and more like a natural disaster. Hammond said business applications seem to be up, which surprises him with the pandemic.