Goldman Sachs analysts found that a bigger burden in terms of interest payments typically translates to cuts in labor costs and capital expenditures.
Big corporations aren’t likely to avoid the bite of higher interest rates forever, particularly with an estimated $1.8 trillion of U.S. corporate debt coming due in the next two years, according to Goldman Sachs.Corporations needing to refinance existing maturing debt at today’s higher rates would face higher debt costs. Goldman’s economics team, led by Jan Hatzius, expect a 2% increase in interest expenses for corporations in 2024 and a 5.5% jump in 2025, according to a new client note.
With that backdrop, they see a potential 5,000-jobs drag on monthly payrolls growth in 2024 and a 10,000 drag in 2025. But since companies typically stagger their debt maturities for the cheapest possible overall borrowing costs, it also means a growing amount comes due through 2026.
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