Factors Contributing to Lower Business Bankruptcies Rates in Arizona

Factors Contributing to Lower Business Bankruptcies Rates in Arizona

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Factors Contributing to Arizona Business Bankruptcies

Over the past few years there have been trend towards lower number of bankruptcies of Arizona businesses. Since the year 2003 there has only been one year that the bankruptcy rate did not decrease, that year being 2005. A couple factors in Arizona contributed to this trend; a robust real estate market and an increase in consumer spending.

Business bankruptcies in Arizona were trending lower over the past few years, Table 1

Business Bankruptcies.

2003 2004 2005 2006

# Bankrupcies 701 480 525 261

% change (7.3) (31.5) 9.4 (50.1)

2004 saw an increase in bankruptcies of 9.4%, but the overall trend is that business bankruptcies in Arizona have continued to trend lower.

One factor is the strong real estate market. Home sales and average price increased over this time period.Table 2

Homes sales

2003 2004 2005 2006

Homes sales 80,052 98,922 104,725 74,486

Avg cost 149,400 164,900 235,100 275,000

High growth rates of real estate allowed many businesses to offer products and services to new homeowners or people moving into larger homes. With some much growth in the construction industry many companies were able to increase wages. There was an average of 7.4% annual increase in income over this time period.

Another factor that lead to a decrease in bankruptcies over this period of time was the increase in consumer