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Corporate America Is Choking on Debt

Record level of borrowing relative to earnings threatens to imperil the economic recovery.

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After tapping the bond market at a record-shattering pace in recent months, corporate America is more indebted today than ever before.

And while much of that fresh cash—more than US$1.6 trillion in total—helped scores of companies stay afloat during the pandemic lockdown, it now threatens to curb an economic recovery that was already showing signs of sputtering. Many companies will have to divert even more cash to repaying these obligations at the same time that their profits sink, leaving them with less to spend on expanding payrolls or upgrading facilities in months ahead.

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