Zombie firms are filing for bankruptcy as the Fed commits to higher rates
Publishing timestamp: 2023-10-31 06:05:01
Summary
A Federal Reserve estimate suggests that roughly 10% of companies in the U.S. are considered 'zombie firms'. The recent interest rate hikes by the Federal Reserve are causing these zombie firms to go bankrupt. In the first 9 months of 2023, 516 publicly listed firms in the U.S. have filed for bankruptcy. Zombie firms are unprofitable businesses that survive by taking on new debt, and their existence can have detrimental effects on healthy firms in the same sector. The Federal Reserve believes that the share of zombie firms decreased after the implementation of Covid-19 emergency stimulus measures, and they expect interest rates to remain higher for longer.
Sentiment: NEGATIVE
Keywords: goldman sachs group inc, federal reserve system, economy, banking and credit regulation, goldman sachs bdc inc, automobile manufacturing, economist, banks, fdic, economic outlook, fiscal policy, u.s. economy, business, currency markets, airlines, national debt, monetary policy, economic stimulus, markets, debt and bond markets, international monetary fund, reserve banks, kelly evans, world economy, united states, government debt, inflation, business news, central banking, economic policy, interest rates, jerome powell, economic events, retail and wholesale, columbia university, video first, consumer credit, breaking news: markets, auto loans, autos, asset management, breaking news: economy, economic growth, reserve assets,
Source: https://www.cnbc.com/2023/10/31/zombie-firm-bankruptcies-amid-fed-interest-rate-hikes.html