The Fed hiked over 500 basis points and the economy refused to break. One chart explains why.
Corporate America locked in record-low fixed rates during the pandemic and cut its net interest bill to 0.4% of GDP. The Treasury did the opposite. It never termed out its debt at zero, and now pays 3.6% of GDP in interest.
The whole cost of higher rates landed on the government’s balance sheet while corporate America skated. That is the transmission mechanism that went missing after 2022, and why tightening never slowed the economy.
The corporate cushion has an expiration date. Pandemic-era debt is rolling into higher coupons, and the hit lands hardest on the most levered, cash-poor borrowers: leveraged software and junk credit at the front of the line. Favor quality balance sheets over levered stories. Leverage that felt free at 2% becomes a wrecking ball at 6%, and the maturity wall is the clock.
The Fed hiked over 500 basis points and the economy refused to break. One chart explains why.
Corporate America locked in record-low fixed rates during the pandemic and cut its net interest bill to 0.4% of GDP. The Treasury did the opposite. It never termed out its debt at zero,… pic.twitter.com/tU8fRFZ8E8
— Kurt S. Altrichter, CRPS® (@kurtsaltrichter) September 7, 2026