A $2 Trillion Corporate Debt Wall Could Trigger Job Losses In 2024, Goldman Sachs Warns

Goldman Sachs predicts significant economic repercussions due to a looming $2 trillion corporate debt wall, Business Insider reports.

The bank’s recent note highlighted that higher interest expenses from corporate debt refinancing could lead to decreased capital expenditures and the loss of approximately 5,000 jobs monthly in 2024. This figure might surge to 10,000 job losses per month by 2025, assuming interest rates persist at their current elevated state.

“Companies will need to devote a greater share of their revenue to cover higher interest expense as they refinance their debt at higher rates,” stated Goldman Sachs’ Jan Hatzius. He further elaborated that for every additional dollar in interest expense, companies tend to reduce their capital expenditures by 10 cents and labor costs by 20 cents.

With interest rates remaining high, and potentially increasing as the Federal Reserve continues its fight against inflation, the risks associated with refinancing will become more pronounced in the next two years. Goldman Sach’s estimates indicate corporate debt maturities of $230 billion for the remainder of 2023, $790 billion in 2024, and $1.07 trillion in 2025.

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