The U.S. economy is staring down a shocking wave of discharges, a term that encompasses the growing number of bankruptcy filings, further illustrating the crisis in American financial woes. In just July, 71 public and private companies filed for bankruptcy. This increase is an echo of the anguish we saw at the height of the Covid-19 pandemic in 2020. Our nation’s once unthinkable $37 trillion in debt continues to taint the fiscal environment. Adding to that challenge are the long-term pressures of high interest rates.
Experts say that these problems are merely symptomatic of a more acute economic malaise. Most point to high interest rates as the primary driving force. The Federal Reserve has targeted the Federal Funds rate at 4.25%. A large swath of the public thinks that this increased rate adds to the financial burdens of both businesses and consumers.
The Federal Open Market Committee (FOMC), elevated level of concern on inflation. They warn that it is a long-term issue expected to deepen in the next months. That sentiment is rippling throughout the economy, affecting everything from consumer expenditures to corporate capital spending plans.
The financial chaos is at all but a small handful of firms. Del Monte has listed liabilities of $1 billion to $10 billion. This woeful state of affairs underscores the tight-rope walk perilous corporations are doing these days.
Beyond these corporate headwinds, the macroeconomic picture is complicated by looming debt maturities. In 2014, the U.S. issued $264 billion in 10-year notes, which will all come due and payable this year. Moreover, it sold $368.8 billion of 7-year notes in 2017. The coming collision of these maturing debts with new persistent economic pressures creates a perfect storm for fiscal instability.
In spite of these hurdles, for the three months ending in June, the U.S. stock market boomed—verging on 3% economic growth in that quarter. July was a month of immense pressure on the economy. Given this unrest, some economists began to question if the growth was sustainable, considering the mounting budgetary pressures.
Today, the yield on the 10-year Treasury Bond is 4.30% — an indication of investor fear over whether or not we will see a recession in the near term. To make matters worse, all of this is happening at $63 oil, which will have a delayed but powerful upward effect on inflation.
Analysts suggest that if the U.S. were to consider revaluing its gold reserves—reportedly over 8,000 tons—it could potentially alleviate some of its substantial debt burden. Widely recognized economists such as James Rickards have sounded the alarm on our shocking $150 trillion “birthright.” Those assets, they think, could be central in addressing America’s national debt.
“Companies are contending with elevated interest rates as uncertainty from US tariff policy pressures costs and supply chain resilience,” – An industry expert.