Companies are going bankrupt at the fastest pace since 2020: A 'historic surge'
FHN Financial chief economist Chris Low and MacroPolicy Perspectives senior advisor Constance Hunter discuss whether inflation or the economy will slow down first on 'Making Money.'
There is a «historic surge» of corporate bankruptcies underway in the U.S., as debt-saddled companies struggle to adjust to the new era of high interest rates.
New figures published by S&P Global Intelligence show that 75 companies filed for bankruptcy in June, the highest number recorded in a single month since early 2020 at the height of the COVID-19 pandemic. That pushed this year's total number of bankruptcies so far to 346, which is notably higher than comparable levels seen in the past 13 years.
Before this, the highest half-year figure recorded was in 2010, with 437 companies filing for bankruptcy from January through June.
The S&P report blamed high interest rates, supply chain issues and slowing consumer spending for the spike in bankruptcies this year.
HIGHER INTEREST RATES COULD COST US COMPANIES $380B IN 'SLOWLY UNFOLDING CRISIS'
A Red Lobster restaurant in Alexandria, Virginia, on Friday, June 7, 2024. Red Lobster filed for bankruptcy on May 19, 2024. (Photographer: Ting Shen/Bloomberg via Getty Images / Getty Images)
The Federal Reserve raised interest rates sharply in 2022 and 2023 to the highest level since 2001 in a bid to crush high inflation, bringing to an end more than a decade of ultra-easy money. Officials are now grappling with when they should take their foot off the brake amid signs that economic growth is slowing and inflation is once again falling.
Most investors expect the Fed to begin cutting rates in September or November and are penciling in just one or two reductions this year — a dramatic shift from the
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