Heavy use of supply chain financing tools comes with significant risks

U.S. corporate bankruptcies year to date are at their highest level since the immediate aftermath of the Great Recession in 2010; banks are tightening credit in the wake of the acute stress in the regional banking system; and small companies in particular are reporting difficulty obtaining credit. 

U.S. consumers are under acute pressure as well, with credit card debt at all-time highs despite interest rates of 20% and higher and all manner of consumer packaged goods companies and retailers reporting increased sensitivity to higher prices, trade-down behavior and shrinking sales of big-ticket discretionary items. 

What will happen to U.S. consumers when borrowers have to restart paying their federal student loan bills in October? There also are other major risk factors beneath the surface, one of which is a form of hidden debt that U.S. corporations have made use of in recent years.

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