big corporations aren’t likely to avoid the bite of higher interest rates forever particularly with an estimate 18 trillion of us corporate debt coming due in the next two years according to goldman sachs that also means companies could start cutting jobs and rolling out other belttightening measures corporations needing to refinance existing maturing debt at today’s higher rates would face higher debt costs goldman’s economics team led by jan hatzius expect a 2 increase in interest expenses for corporations in 2024 and a 55 jump in 2025 according to a new client note they also found that a bigger burden in terms of interest payments typically translates to cuts in labor costs and capital expenditures based on an analysis of data from public companies since 1965 “we find that for each additional dollar of interest expense firms lower their capital expenditures by 10 cents and labor costs by 20 cents about half of which comes from reduced employment and half of which comes through lower wages” the team wrote in a sunday evening note with that backdrop they see a potential 5000jobs drag on monthly payrolls growth in 2024 and a 10000 drag in 2025 to visualize the bigger debt picture the goldman team tracked a wave of corporate debt maturities that pick up later this year through 2030 like homeowners many big us businesses were part of a pandemic borrowing blitz that helped lock in low fixed rates while also providing shelter from the federal reserve’s ratehiking campaign in the past 16 months but since companies typically stagger their debt maturities for the cheapest possible overall borrowing costs it also means a growing amount comes due through 2026 at the same time fed officials expect rates to stay higher for longer although some economists anticipate cuts to arrive next spring a part of the problem has been a surprisingly resilient labor market keeping inflation elevated and the economy humming despite fears that the fed’s rapid pace or rate hikes would trigger a recession fresh labormarket data points to the economy adding 187000 job in july a sign that hiring may be slowing but with wages steady at a 44 annual rate and unemployment retreating to 35 from 36 federal officials want to see yearly wage gains of 3 or less confidence in a soft landing has been growing even as cracks in credit have emerged particularly for borrowers with floatingrate debt see leveraged loan defaults hit 25 billion head for third worst year in history says goldman in a sign of potentially more stress to come trucking company yellow corp yell on monday filed for chapter 11 protection blaming “bullying” by teamsters the company received a 700 million pandemic bailout from the government when it was known as yrc worldwide inc including loans with floatingrate debt due in september 2024 stocks rose monday with the dow jones industrial average djia sp 500 index spx and the nasdaq composite index comp looking to shake off last week’s weakness after treasury yields bxtmubmusd10y shot up to new 2023 highs