Data: Federal Reserve; Chart: Axios Visuals
U.S. businesses now have more debt than American households, according to data released by the Fed on Thursday.
Why it matters: It’s the first time corporate borrowing levels has clipped that of households in 28 years and "a potential warning sign for the economy as corporate investment softens," Bloomberg reports.
- Lower-for-longer interest rates have fueled a borrowing frenzy, and Fed officials have warned about potential risks high corporate debt levels could pose to the record-long economic expansion.
Between the lines: Businesses investment "has historically climbed when borrowing rose."
- But companies have pulled back on investing in things like new buildings and factories — which fuel economic growth — with CEOs citing trade war uncertainty and worries about a global growth slowdown as the reason.
- Bloomberg notes companies in some cases used borrowed cash to finance buybacks and dividends.
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