US Federal Reserve officials believe that numerous national companies may go bankrupt in the near future. Despite an economic recovery in the country, low interest rates and other factors pose a serious threat to most enterprises.
Even if the economic outlook improves, the risk that the United States could face a new wave of business failures will be still high. According to the Fed's monetary policy report, business borrowing “now stands near historic highs”. However, “insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable”, the regulator stressed.
Federal Reserve Chair Jerome Powell assumes that it will take years for the US labor market and the national economy to return to pre-coronavirus levels. Notably, in February 2020, the US unemployment rate was 3.5%. In April 2020, it jumped to 14.8%. In January 2021, the figure fell to 6.3%.
The US Commerce Department's Bureau of Economic Analysis said that the country's economy had shrunk by 3.5% last year, marking the sharpest contraction since the Second World War. The largest economy sank on an annual basis for the first time since the 2008 financial crisis when its GDP dropped by 2.5%. At the same time, the US economy grew by 4% in the last quarter of 2020.
Analysts believe that in the current situation, a new $1.9 trillion stimulus package proposed by US President Joe Biden will provide substantial support to the American economy.
