A Global Slowdown Will Test US Corporate Fragility

Dimitri Papadimitriou, Michalis Nikiforos and Gennaro Zezza

Economics One-Pager Archive from Levy Economics Institute

Abstract: The rapidly growing uncertainty about the potential global fallout from an emerging pandemic is occurring against a background in which there is evidence US corporate sector balance sheets are significantly overstretched, exhibiting a degree of fragility that, according to some measures, is unmatched in the postwar historical record. The US economy is vulnerable to a shock that could trigger a cascade of falling asset prices and private sector deleveraging, with severe consequences for both the real and financial sides of the economy.

Date: 2020-03
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