US businesses on borrowing binge
US households are notorious for racking up debt, but companies are not far behind.
US households are notorious for racking up debt, but companies are not far behind. As a percentage of GDP, the total debt of America's non-financial corporations has reached around 74%, a record high slightly above the 2008 peak. Debt is more evenly distributed now, says The Economist. Last year only 27% of firms were highly levered meaning that their debt was worth five times their profits compared with 42% in 2007, "so fewer are immediately at risk" this time round.
The sector most at risk, according to ratings agency Standard & Poor's Global Ratings, is retail. But as interest rates rise from historic lows, all this borrowing is likely to be a drag on overall investment and growth.