“Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: Southern California bankruptcy filings rise, albeit slightly, for first time in eight years.

Source: American Bankruptcy Institute

The Trend

U.S. Bankruptcy Court’s Central California district had 28,215 bankruptcies filed in this year’s first three quarters, an increase of 2.7% vs. the same period in 2018. Those individual and company filings equaled 4.9% of the 580,458 filings made nationwide through September. U.S. bankruptcies decreased 0.6% over the past 12 months.

The local district — comprising the counties of Los Angeles, Ventura, San Luis Obispo, Santa Barbara, Orange, Riverside and San Bernardino— has seen its share of U.S. filings drop. Since 2010, bankruptcies in the local district have been 7% of filings nationwide.

The Dissection

The bankruptcy increase is not only in SoCal.

Statewide, there were 51,385 filings in the same period, up 1% in a year — but that was only the 17th largest percentage increase among the states. Hawaii, Florida then Montana had the three largest increases. Biggest improvements? Wyoming, Massachusetts and South Dakota.

Yet the number of bankruptcies has declined rapidly after the bubble-bursting crash’s financial hangover wore off.

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Since 2015, Southern California averaged 29,980 filings in the first three quarters vs. 77,667 in 2010-14. That’s a stunning 61% drop and a bigger improvement than the nation: Since ’15, U.S. bankruptcies averaged 593,929 through September vs. 940,547 in 2010-14, a 37% decline.

How bubbly?

On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … TWO BUBBLES!

Look this is not any hint of sequel to the Great Recession. Yet any increase in bankruptcies is worth keeping an eye on.

At this point, this appears to be a minor uptick after a remarkable recovery. Perhaps it signals that the days of everyone in the region making easy money may have ended and those with poor financial skills, corporate or consumer, got hit hard.