Zombie Firms Are Increasingly Filing for Bankruptcy as the Fed Commits to Higher Rates

In 2023, 516 U.S. firms went bankrupt amid increasing ‘zombie firms’—companies surviving on debt despite low sales. The IMF suggests this trend negatively impacts the economy. While some banks have propped up these firms, the Fed observes a shift towards healthier corporate balance sheets and continued high-interest rates, suggesting a tougher environment for at-risk businesses.