U.S. corporate bankruptcies thus far in 2023 are their highest since 2010, according to a new report from S&P Global Market Intelligence. S&P 500 earnings were down year over year in Q1 and are expected to continue falling in Q2. Financial conditions are tightening, in the form of higher interest rates and more stringent lending standards. U.S. economic fundamentals are likely to deteriorate further in the months ahead as student loan payments resume and higher auto loan rates eventually adversely affect borrowers. And already-high corporate debt levels are arguably understated. As evidenced by elevated corporate bankruptcies as well as recent dividend cuts and share repurchase freezes, liquidity risks are rising.
