There are different layers of wellness in the corporate world. In the tech sector and particularly in the mega cap space, everything looks good: earnings are growing and their stock prices reflect that growth, although with questionable valuations. There’s another layer of big corporations that show moderate growth, but seem to be more consistent with a sub 2% gdp economy. And then, there is another layer of companies that are struggling, suffering from high rates and accumulated inflation, that may be unable to pass those higher costs to consumers. The chart below shows the size of that struggle; 275 companies have filed for bankruptcy protection YTD till May. That is the second highest number, after 2023, since 2011. Within the universe of 6.1 million employer companies in the U.S., this might look like a drop in the ocean, but it is a good proxie of the status of the economy and the employment picture. We’re looking at the visible part of the iceberg, but there are more troubled companies underneath the surface.
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