Business Failures Increase 16%, Survey Says

U.S. business failures jumped 16% last year after two years of little change, according to a Dun & Bradstreet Corp. survey. Business failures totaled 83,384 in 1997, as every industry group except mining and wholesale companies posted an increase, the survey said. In California, the number of business failures climbed 19% to 20,089 from 16,879. “What we’re seeing is a lag result in 1997 from start-ups several years ago that ran into stiff competition as new people entered the field,” said Joseph Duncan, Dun & Bradstreet’s chief economic advisor. The number of business failures should rise in the next few years, he added, as more new companies enter the market. Duncan said that even though the number of failures is now approaching the high levels reached during the recession of the early 1990s, the economic impact is subdued because company liabilities, or debt, remain at low levels. Liabilities from the failures soared 27% to $37.4 billion nationwide while rising 5.1% in California to $5.71 billion.