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The road to recovery is paid with consumer dollars. No amount of federal money will salvage the economy if individuals aren’t spending and households aren’t able to avoid financial ruin. Conditions are far from perfect, but, it’s also how the figures are viewed.

According to the American Bankruptcy Institute (ABI), consumer bankruptcy filings approached 120,000 in August, which was a 24% increase over the same month last year, but was a 5% decrease from the July 2009 filings of 126,000. July’s consumer bankruptcy filings were the highest monthly total since the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was enacted in October 2005 and represented the second time this year that monthly filings topped 125,000.

For much of the past nine months, the ABI has seen month-to-month increases in consumer bankruptcies. In June, consumer filings were down 6.8% from May figures, while the May figures were about 1% lower than the 125,000 filings seen in April. Add in the August decline and there have been month-to-month declines in consumer filings in three of the last four months.

“Consumers are continuing to turn to bankruptcy as a shield from the sustained financial pressures of today’s economy,” said ABI Executive Director Samuel Gerdano. “As a result, we expect consumer filings to top 1.4 million this year.” Except for January, consumer bankruptcy filings have totaled more than 100,000 per month. During the last two months, Chapter 13 filings have continued to account for 28.3% of all consumer cases.

Though bankruptcy has become one of the most prevalent issues in the current economy, at the end of August, the Department of Commerce reported that real personal spending in July had increased nominally by 0.2% and personal income had increased an equally unimpressive less than 0.1%. This was seen as good news, particularly in light of the drop of 1.1% in personal income in June. The Commerce Department gave the thumbs up to the American Recovery and Reinvestment Act, which, during the first half of the year, supplied more than 95% of working families with tax relief that “boosted their disposable income.”

That’s ideal as the nation is entering the prime spending months with kids going back to school and the holiday season looming.

It does appear that those modest sums of disposable income are tapped, albeit a little tentatively, as the International Council of Shopping Centers (ICSC) reported that in August, U.S. comparable store sales fell 2% from last August. This was tremendous news for chain store sales, because it represented the smallest decline since September 2008 and was a smaller loss than expected. Even Gap Inc., which posted a 3% drop in comparable-store sales in August, could bellow a “w00t” that the decline still was the best performance it has had since January 2008 and on the right side of the 8% decrease it saw last August. For the four-week period ending August 29, the company reported sales of $1.12 billion, which was a 2% decline from the same period last year. The clothing giant patted the back of its denim collections at its Gap and Old Navy stores for the strong back-to-school performance. It’s still striving for rebound as year-to-date, net sales have totaled $7.49 billion—a figure not to sneeze at—but 7% below the same period in 2008.

While massive retailers were happy to simply see the bleeding slow, the ICSC showed that much of the modest declines it reported in its August figures were buoyed by major increases by smaller retailers like Aeropostale, Inc., Cato Corporation and Tandy Leather Factory. Aeropostale, a mall-based apparel retailer, posted total net sales for the four-week period ending August 29 of $241.7 million, a 16% increase from the four-week period last year. Year-to-date, the company’s total net sales have increased 20% and Aeropostale’s same store sales increased 9% in August.

Cato enjoyed similar success with a 6% increase in sales to $59 million for the four-week period and same-store sales increased 5% for August. The company also opened five new stores during the month, recovering much of the ground it lost over the last year in terms of locations.

Matthew Carr, NACM staff writer. Follow us on Twitter @NACM_National


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