2016 Bankruptcy Forecast -- Let's Say 780,000
Forecasting U.S. bankruptcy filings for this year was a little more complicated. In a comment to my post about the total 2015 bankruptcy filings, Erich Fabricius made the astute observation that December 2016 saw the introduction of new bankruptcy forms and that could explain my befuddlement at the abnormally large 14.8% decline for December in terms of year-over-year daily filing rates. November, in contrast, saw almost no decline in the year-over-year rate, which is also unusual. The relatively stronger numbers in November suggests that attorneys were perhaps trying to beat the deadline before the new forms went into effect. The effect would not have to be huge -- shifting 5,000 filings from December into November would have been enough to create this effect.
What that means is my preferred mathematical model to predict bankruptcy filings for the next year has to start with the immediately previous two months being untypical months. If I run the model with the actual data, I get 800,000 filings. If I "correct" the numbers for November and December to what would have been expected had recent monthly trends continued, the model predicts 782,000 filings. The model controls for the amount of outstanding consumer credit and national personal income and has proven accurate in the past.
A cruder estimate comes from using the data for the last six months of the previous year to predict the following calendar year. The bankruptcy filings for the last six months of 2012 and 2013 were 53.6% of the following year's filings, and the figure was 52.6% for the last months of 2014 as compared to 2015. The rate of decrease in bankruptcy filings has been slowing over the past nine months, so the ratio is likely to fall again this year. If filings in the the last six months of 2015 are 51.6% - 50.6% of the total for 2016, that will be a total of 768,000 - 783,000 for calendar year 2016.
I forecast 2016 total U.S. bankruptcy filings as 780,000. If that is right, that would only be approximately a 4.8% decline in the bankruptcy filing rate. In recent years, the rate has been falling at double digit rates -- 10% or more. Still, it is important to keep in perspective just how low the filing rate would be. My forecasted filing rate would be about 2.4 filings per 1,000 persons. You would have to go back to 1988 for the last time filing rates were that low.