Financial Times: US corporate bankruptcy hits 14-year high

Published on January 7, 2025

The British newspaper Financial Times confirmed on Tuesday that US corporate bankruptcy rates hit their highest level in 14 years, affected by high interest rates and declining consumer demand.

The newspaper explained that this situation has not been witnessed by US companies since the global financial crisis, as “high interest rates and weak demand punished distressed groups.”

According to data from S&P Global Market Intelligence, 686 companies are expected to declare bankruptcy by the end of 2024, an increase of 8% compared to 2023, making it the highest since 828 companies went bankrupt in 2010.

Fitch data also indicated an increase in out-of-court maneuvers to avoid bankruptcy, as these cases exceeded actual bankruptcies by a rate of two to one. In contrast, lenders with issuers with debts exceeding $100 million saw their lowest recovery rates since 2016.

The newspaper attributed this decline to the decline in the stimulus provided by the “Covid-19” pandemic, which affected companies that rely heavily on consumer spending.

In this context, Gregory Daco, chief economist at EY, said: “The continuous rise in the costs of goods and services is weighing on consumers, with the greatest impact on low-income households, and even middle- and upper-income households have become more cautious in spending.”

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