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Reference News reported on July 15 According to the U.S. Fortune magazine website on July 13, the number of U.S. companies filing for bankruptcy last month exceeded the peak at the beginning of the 2020 COVID-19 pandemic, when the U.S. economy was hit hard by the epidemic.

S&P Global Market Intelligence reported Monday that bankruptcy filings so far this year have exceeded levels from the same period in 2020 and are higher than any comparable figure in the past 13 years.

"High interest rates, supply chain issues and slowing consumer spending continue to weigh on distressed businesses," S&P Global Market Intelligence said.

At the same time, 2023 was the worst year for corporate bankruptcies since the Great Financial Crisis, and the total number of corporate bankruptcies in 2024 is expected to exceed last year.

It’s another sign that the Federal Reserve’s aggressive rate-raising campaign is taking a toll on the economy, with even Fed Chairman Jerome Powell noting that the labor market is showing increasing signs of cooling.

Notable companies entering bankruptcy proceedings include electric car maker Fisker Automotive, which filed for bankruptcy on June 17. Fisker executives said in February that 2023 sales were hurt by supplier delays, rising interest rates and a skilled labor shortage, S&P Global Market Intelligence noted.

Another business that filed for bankruptcy last month was Chicken Soup for the Soul, owner of the Red Box DVD rental company. Chicken Soup for the Soul initially filed for protection on June 28 to stay afloat while developing a plan to repay its debts. But a week later, the company switched to filing for bankruptcy, meaning it would shut down and liquidate its business.

Meanwhile, thousands of other companies are struggling to stay afloat. An Associated Press analysis last month found that the number of publicly traded “zombie” companies has surged to nearly 7,000 worldwide, with 2,000 in the U.S. alone. These companies accumulated cheap debt and then suffered a surge in borrowing costs as the Federal Reserve raised interest rates to fight high inflation.

The surge in bankruptcy filings comes as more people on Wall Street are sounding the alarm about the economy.

Citigroup Research reported last week that the Institute for Supply Management's service sector sentiment index suddenly turned negative and the monthly employment report showed the unemployment rate rose to 4.1%. This increases the risk of a sharper economic slowdown, prompting Citigroup Research to predict that the Federal Reserve will cut interest rates eight times, by 25 basis points each time, starting in September and continuing until July 2025.

Citigroup Research also highlighted the "Sam's Rule" recession indicator, saying it could be triggered in August if unemployment continues to rise at its current pace.

Claudia Sam, the creator of the "Sam Rule," was a former Federal Reserve economist and is now chief economist at New Century Consulting. Last month, she told reporters that if the Fed continues to delay rate cuts, it could push the economy into recession. Sam said: "Recession is a real risk, and I don't understand why the Fed is pushing this risk. I'm not sure what they are waiting for."