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Higher Interest Rates Are Giving Businesses An Unexpected Boost, For Now

But here’s how things could change.

Sky-high interest rates haven’t shaken the US economy in exactly the way you might’ve expected. A still-strong job market, pandemic-era household savings, and locked-in, 30-year mortgages are helping to keep consumer spending strong. And that’s keeping businesses somewhat bubble-wrapped against the impact of those rate rises too – for now at least.

This chart looks at how higher interest rates usually play out for businesses. It shows net interest expenses – that’s the interest cost on a firm’s debt *minus* any earned from cash in the bank – for non-financial companies in the US (red line). Remarkably, the measure is at 60-year lows – and that’s despite the rocketing interest rates (black line). Now, only the most credit-worthy firms can lock in interest rates for 30 years, but most can nail down a low rate for five or ten. So before rates started marching higher, savvy companies would’ve done that.

But, it’s not all a bed of roses. Eventually medium- and long-term debt will need refinancing, and if interest rates stay high, that’ll be more costly for firms. There’s also the fact that building interest-earning cash piles or paying off expensive debt is a cash drain, and it means other stuff – like share buybacks, dividends, acquisitions, or just growth expansion – might have to be sacrificed. A lack of spending on all those things could hurt future profit growth.

But for now, though, some smart balance sheet management has not only softened the blow of a higher rate environment, but has also turned it into an advantage.



Quick Take

encryptedEmail

planSlug

slugOrId

ContentPieceQuery

viewer

authorization

content

SingleContentPiece_viewer

webSubscriptions

contentPiece

mostPopularTags

features

query ContentPieceQuery(
  $slugOrId: String
  $encryptedEmail: String
  $planSlug: String
) {
  viewer {
    authorization {
      roles {
        isAnonymous
      }
      ...SingleContentPiece_authorization
    }
    ...SingleContentPiece_viewer_4uP6yi
    content(encryptedEmail: $encryptedEmail) {
      ...SingleContentPiece_content
      contentPiece(slugOrId: $slugOrId) {
        __typename
        ...SingleContentPiece_contentPiece
        canonicalLink
        id
      }
    }
    id
  }
}

fragment AccessibleImage_accessibleImage on AccessibleURLImage {
  full
  altText
}

fragment AdvertWrapper_activeProductAdvert on ProductAdvert {
  id
  advertHandle
  destinationUrl
  sponsoringCompany {
    name
    id
  }
}

fragment AnonymousPaywall_viewer_2HyoJ4 on Viewer {
  webSubscriptions {
    defaultWebPlan {
      ...PremiumAccountPromotionPanel_webPaymentPlan_2HyoJ4
    }
  }
}

fragment AudioOnlyBanner_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  headerImage {
    ...ServerImage_image
  }
  title
}

fragment AuthorLinkWrapper_author on Author {
  slug
  isActive
}

fragment Avatar_image on URLImage {
  original
}

fragment BannerAdvert_activeProductAdvert on ProductAdvert {
  title
  description
  destinationUrl
  sponsoringCompany {
    name
    id
  }
  wideImage {
    ...AccessibleImage_accessibleImage
  }
  narrowImage {
    ...AccessibleImage_accessibleImage
  }
  ...AdvertWrapper_activeProductAdvert
}

fragment Block_block on ContentPieceBlock {
  __isContentPieceBlock: __typename
  __typename
  ... on TextBlock {
    id
    ...TextBlock_block
  }
  ... on ImageBlock {
    id
    ...ImageBlock_block
  }
  ... on QuoteBlock {
    id
    ...QuoteBlock_block
  }
}

fragment ContentAuthorAndMetadata_author on Author {
  id
  byline
  profilePicture {
    ...Avatar_image
  }
  ...AuthorLinkWrapper_author
}

fragment ContentDownloadBlock_authorization on Authorization {
  roles {
    isB2bUser
  }
}

fragment ContentDownloadBlock_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...DownloadContentDropdown_contentPiece
  ...LicenseContentButton_contentPiece
  isAvailableToProducts
}

fragment ContentFooter_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  id
  title
  deepLink
  canonicalLink
  slug
  hasChapters
  chapters {
    __typename
    id
    slug
  }
  mostRelevantTags(first: 30) {
    edges {
      node {
        __typename
        ...Tag_tag
        ... on Node {
          __isNode: __typename
          id
        }
      }
    }
  }
}

fragment ContentHeaderDetails_authorization on Authorization {
  roles {
    isB2bUser
  }
}

fragment ContentHeaderDetails_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...ListenButton_contentPiece
  ...ContentPieceBookmarkIcon_contentPiece
  ...ContentDownloadBlock_contentPiece
  id
  title
  deepLink
  canonicalLink
  slug
  hasChapters
  chapters {
    __typename
    id
    slug
  }
}

fragment ContentHeader_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...DefaultContentHeader_contentPiece
  ...EvergreenContentHeader_contentPiece
  contentPieceType {
    name
  }
}

fragment ContentMetadata_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  consumptionTime
  dateUpdatedDisplay
  contentPieceType {
    isEvergreen
  }
  author {
    byline
    ...AuthorLinkWrapper_author
    id
  }
}

fragment ContentPieceBookmarkIcon_contentPiece on ContentPiece {
  id
  isBookmarked
  title
}

fragment ContentPieceSEO_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  title
  imageForSeo: headerImage {
    url: full
  }
  subtitle
  firstPublishedAt
  id
  ... on PublicContentPiece {
    globalContentPieceId
  }
  byline
  seoTitle
  searchDescription
  canonicalLink
}

fragment ContentPieceSponsor_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  sponsoringCompany {
    id
    name
    link
    logo {
      ...ServerImage_image
    }
  }
}

fragment DefaultContentHeader_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...ContentHeaderDetails_contentPiece
  ...AudioOnlyBanner_contentPiece
  ...ContentMetadata_contentPiece
  id
  title
  headerImage {
    ...ServerImage_image
  }
  author {
    ...AuthorLinkWrapper_author
    ...ContentAuthorAndMetadata_author
    id
  }
}

fragment DownloadContentDropdownContentPieceRefetch_viewer_1QxYRk on Viewer {
  contentPieceTranslation: contentPiece(slugOrId: $slugOrId) {
    __typename
    id
    title
    isAvailableToProducts
    blocks {
      __typename
      ...DownloadContentDropdown_blocks
      ... on Node {
        __isNode: __typename
        id
      }
    }
    keyInsightsBlocks {
      id
      ...DownloadContentDropdown_blocks
    }
  }
}

fragment DownloadContentDropdown_blocks on ContentPieceBlock {
  __isContentPieceBlock: __typename
  ... on TextBlock {
    textMarkdown
  }
}

fragment DownloadContentDropdown_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  localeMapping {
    languageCode
    contentPieceId
  }
}

fragment EvergreenContentHeader_authorization on Authorization {
  roles {
    isB2bUser
  }
}

fragment EvergreenContentHeader_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...ContentMetadata_contentPiece
  ...ListenButton_contentPiece
  ...ContentPieceSponsor_contentPiece
  ...ContentPieceBookmarkIcon_contentPiece
  ...ContentDownloadBlock_contentPiece
  canonicalLink
  id
  deepLink
  title
  slug
  hasChapters
  chapters {
    __typename
    id
    slug
  }
  headerImage {
    ...ServerImage_image
  }
}

fragment ImageBlock_block on ImageBlock {
  image {
    ...ServerImage_image
  }
  alt
  caption
  link
}

fragment KeyInsightsBlock_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  keyInsightsBlocks {
    id
    textMarkdown
  }
}

fragment KeyInsightsCarousel_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  keyInsightsBlocks {
    id
    textMarkdown
  }
}

fragment KeyInsights_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...KeyInsightsCarousel_contentPiece
  ...KeyInsightsBlock_contentPiece
  keyInsightsBlocks {
    id
    textMarkdown
  }
}

fragment LicenseContentButton_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  id
  title
  isAvailableToProducts
}

fragment ListenButton_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  id
  title
  trackingTitle
  subtitle
  readingTime
  isPremium
  hasBlocks
  hasChapters
  hasAudio
  contentPieceType {
    name
    trackingName
  }
  ...AudioOnlyBanner_contentPiece
}

fragment LoggedInPaywall_viewer_2HyoJ4 on Viewer {
  webSubscriptions {
    defaultWebPlan {
      ...PremiumAccountPromotionPanel_webPaymentPlan_2HyoJ4
    }
  }
}

fragment MainContentSection_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...ContentPieceSEO_contentPiece
  ...KeyInsights_contentPiece
  ...ContentHeader_contentPiece
  ...ContentFooter_contentPiece
  title
  headerImage {
    ...ServerImage_image
  }
  globalContentPieceId
  trackingTitle
  subtitle
  firstPublishedAt
  readingTime
  isPremium
  deepLink
  hasBlocks
  hasChapters
  hasAudio
  id
  canonicalLink
  byline
  contentPieceType {
    name
    trackingName
  }
  blocks {
    __typename
    ...Block_block
    ... on Node {
      __isNode: __typename
      id
    }
  }
}

fragment MostPopularTags_tags on GenericTagConnection {
  edges {
    node {
      __typename
      ... on AssetClassTag {
        slug
      }
      ... on ContentTag {
        slug
      }
      ... on GeographyTag {
        slug
      }
      ...Tag_tag
      ... on Node {
        __isNode: __typename
        id
      }
    }
  }
}

fragment Navigation_authorization on Authorization {
  roles {
    isB2bUser
  }
}

fragment Navigation_tags on GenericTagConnection {
  ...MostPopularTags_tags
}

fragment PaywallBanner_contentPieceType on ContentPieceType {
  isAvailableForFreemium
}

fragment PaywallBanner_viewer_2HyoJ4 on Viewer {
  ...AnonymousPaywall_viewer_2HyoJ4
  ...LoggedInPaywall_viewer_2HyoJ4
}

fragment PremiumAccountPromotionPanel_webPaymentPlan_2HyoJ4 on WebPaymentPlan {
  amount
  currency
  currencySymbol
  interval
  promotionApplied(slug: $planSlug) {
    stripeDiscount {
      discountPct
      discountAmount
      id
    }
    id
  }
}

fragment QuoteBlock_block on QuoteBlock {
  quote
  caption
}

fragment ServerImage_image on URLImage {
  full
}

fragment SingleContentPiece_authorization on Authorization {
  ...authorization_authorization
  ...ContentHeaderDetails_authorization
  ...ContentDownloadBlock_authorization
  ...EvergreenContentHeader_authorization
  roles {
    isPreviewingContentAllowance
    isPreviewing
    isAnonymous
    hasPremiumSubscription
    isFreemium
  }
}

fragment SingleContentPiece_content on Content {
  ...authorization_content
  anonymousUserHasPremium
}

fragment SingleContentPiece_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  ...AudioOnlyBanner_contentPiece
  ...authorization_contentPiece
  ...MainContentSection_contentPiece
  globalContentPieceId
  trackingTitle
  isPremium
  hasBlocks
  hasChapters
  hasAudio
  contentPieceType {
    name
    trackingName
    isAvailableForFreemium
    ...PaywallBanner_contentPieceType
  }
  chapters {
    __typename
    id
    slug
  }
  sponsoringCompany {
    name
    id
  }
  activeProductAdvert {
    ...BannerAdvert_activeProductAdvert
    id
  }
}

fragment SingleContentPiece_viewer_4uP6yi on Viewer {
  ...PaywallBanner_viewer_2HyoJ4
  ...DownloadContentDropdownContentPieceRefetch_viewer_1QxYRk
  mostPopularTags(first: 10) {
    ...Navigation_tags
  }
  authorization {
    ...Navigation_authorization
  }
  features
}

fragment Tag_tag on GenericTag {
  __isGenericTag: __typename
  __typename
  ... on AssetClassTag {
    name
    slug
  }
  ... on GeographyTag {
    name
    slug
  }
  ... on ContentTag {
    name
    slug
  }
}

fragment TextBlock_block on TextBlock {
  textMarkdown
}

fragment authorization_authorization on Authorization {
  roles {
    isPreviewingContentAllowance
    isPreviewing
    isAnonymous
    hasPremiumSubscription
    isFreemium
  }
}

fragment authorization_content on Content {
  anonymousUserHasPremium
}

fragment authorization_contentPiece on ContentPieceInterface {
  __isContentPieceInterface: __typename
  isPremium
  contentPieceType {
    isAvailableForFreemium
  }
}


Higher Interest Rates Are Giving Businesses An Unexpected Boost, For Now

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