Corporate America's Debt Binge: Ignoring Jay Powell's Warnings

Despite efforts by Federal Reserve Chair Jerome Powell to curb borrowing and spending habits, many CEOs and CFOs in Corporate America are ignoring the message and continuing to accumulate debt. Companies with investment-grade credit ratings have added over half a trillion dollars of net debt since the first interest rate increase in 2022, while even sub-investment grade companies have been increasing their borrowing. This borrowing spree has raised concerns about the financial health of these companies, with indicators of their ability to make payments deteriorating. The risk is that if the Fed raises rates too much, it could lead to a recession that impacts heavily indebted companies.