Our Bankruptcy Outlook – August 2023

The Atlanta Federal Reserve Beige Book for July, 2023, ahead of the Fed’s quarterly meeting, was mostly upbeat. The economic activity in the Sixth District, spanning from mid-May to June, exhibited measured growth. Labor availability and retention improved, and wage pressures began to ease. Nonlabor costs were stabilizing, and pricing power varied. While retail sales of discretionary items softened, consumer spending on essentials remained strong. Auto sales held their ground. Domestic leisure travel declined, while business and international travel increased, notably in the cruise sector. Housing demand remained robust, leading to reduced home inventories and rising house prices. Commercial real estate conditions were mixed. Manufacturing saw robust demand. Loan volume increased, but deposit growth slowed. Energy sector activity was stable, and agriculture demand slowed.

Some of the concerns we’re seeing relate to tightening availability of credit. Rising interest rates and uncertainty around collateral risks are making banks and other lenders more cautious. Business models that were built during an era of extremely low interest rates are suffering during the Fed’s efforts to tamp down inflation. US bankruptcy filings are up roughly 10% over this period last year.

Insights from the July book:

Labor Markets:

Labor availability and retention improved across the board, and businesses continue to hire. Although some sectors faced challenges in filling certain roles, most firms experienced better candidate availability. Manufacturing firms had varied staffing situations, with some heavily short-staffed while others stabilized employment levels. Wage growth remained higher than pre-pandemic levels, although wage pressures began to ease.


Nonlabor costs stabilized, with notable declines in construction input costs. Wholesale pushback on price increases increased, while consumer prices remained elevated. The Business Inflation Expectations survey indicated reduced year-over-year unit cost growth and lower year-ahead inflation expectations.

Consumer Spending and Tourism:

Consumer spending shifted towards essentials, leading to a moderation in discretionary spending. Automobile sales remained resilient, but there was a trend toward lower price-point models. Domestic leisure travel softened, while business, international, and cruise travel showed strength.

Construction and Real Estate:

Housing demand remained strong, causing declining home inventories and rising home prices. Limited existing home inventories drove new home construction demand. Commercial real estate conditions were mixed, with general retail and industrial activity remaining healthy. The multifamily sector cooled, and the office sector experienced mixed conditions.


Transportation activity slowed further, with declines reported in container traffic and rail freight volumes. Logistics firms reported flat warehousing revenues offset by higher prices.

Banking and Finance:

Growth slowed at District financial institutions due to deposit base decline and interest rate increases. Loan growth primarily focused on residential, construction, and development. Institutions expected asset quality to normalize in the coming quarters.


Agricultural conditions were soft, with oversupplies affecting milk and chicken demand. Citrus growers saw good sales returns but weak profits due to low yields. Row crops remained healthy, though storms damaged crops in some regions. Cotton demand continued to fall, while the cattle market remained strong.

If you need business advice on how to position your company to weather potentially volatile times ahead, please contact the experienced financial and bankruptcy attorneys at Jennis Morse.