Rate hikes will bite as 37% of US companies in trouble: Fed economists

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Fed economists say a historic 37% of US companies are in big trouble - and warn that could worsen the fallout from fighting inflation

Federal Reserve economists just warned a historic surge in the percentage of distressed American companies could worsen the fallout from the US central bank's fight against inflation.

That's likely because debt-ridden companies will balk at spending money on new equipment or facilities, hiring more people, and ramping up production. The Fed has already hiked interest rates from nearly zero to north of 5% since last spring in an effort to curb inflation, which spiked to a 40-year high of more than 9% last year. After 10 consecutive rate hikes, the central bank has helped to bring inflation down to about 4%.

 

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