In July, corporate bankruptcies in the U.S. reached their highest monthly level since the early days of the 2020 pandemic, a stark indicator of underlying economic pressures despite broader market gains. According to data highlighted in a recent report from Business Insider, 71 large companies filed for bankruptcy protection last month, surpassing the peaks seen during the initial COVID-19 shutdowns. This surge comes amid a resilient stock market and steady GDP growth, but it underscores how persistent high interest rates are squeezing debt-laden firms.

Analysts point to the Federal Reserve’s prolonged tight monetary policy as a primary culprit. With benchmark rates hovering near two-decade highs, borrowing costs have escalated, making it tougher for companies to refinance existing debts or secure new capital. The phenomenon echoes patterns from past cycles, where rate hikes exposed vulnerabilities in overleveraged sectors like retail, real estate, and manufacturing.

Rising Filings Amid Economic Resilience

The irony is palpable: while unemployment remains low and consumer spending holds firm, bankruptcy filings have climbed steadily since 2023. S&P Global Market Intelligence, as cited in a Fortune analysis, reported that June alone saw 75 filings, building on a trend that pushed 2024 totals to 694—the highest since the post-financial crisis years. For 2025, the first half has already logged a 73% year-over-year increase in petitions, per data from AInvest, signaling that the wave may not crest soon.

Industry insiders note that this isn’t just about rates; it’s compounded by weakening consumer demand in discretionary areas. Retail chains and restaurants, battered by inflation-weary shoppers, dominate the casualty list. A TheStreet roundup of 2025’s notable collapses highlights cases like major apparel brands and casual dining operators, where slim margins couldn’t absorb rising operational costs.

Sector-Specific Pressures and Warnings

Drilling deeper, the construction and healthcare sectors are also flashing red. Elevated material prices and labor shortages have hammered builders, while hospitals grapple with reimbursement shortfalls. Reuters, in a 2024 overview extended into current trends, attributes much of this to “sticky inflation” that erodes profitability even as top-line revenues stabilize.

For chief financial officers, the message is clear: proactive debt management is essential. A The CFO report from January 2025 warned of a 14-year high in filings, driven by rates that “bite” into cash flows. Companies with high-yield bonds maturing soon face a refinancing cliff, potentially accelerating defaults if the Fed delays cuts.

Outlook and Strategic Implications

Looking ahead, experts debate whether this bankruptcy spike portends a broader downturn or merely a correction for pandemic-era excesses. NPR’s 2023 analysis, which resonates today, noted how the end of “easy money” eras often leads to such purges, weeding out inefficient players. Yet, with markets pricing in potential rate reductions by late 2025, some relief could emerge.

Insiders advise bolstering liquidity and diversifying funding sources. As CFO Dive observed in July, the year-to-date petition volume positions 2025 as one of the busiest in over a decade, urging executives to scenario-plan for prolonged stress. In this environment, resilience isn’t just about survival—it’s about positioning for the inevitable rebound when monetary policy eases.