The number of business bankruptcies and insolvencies in most countries has declined this year through the coronavirus pandemic as the world is seeing far fewer bankruptcies than it did in 2019.

• But that is largely thanks to assistance from central banks and government measures restricting things like foreclosures.

What it means: When the smoke clears the world is likely to be looking at a sizable increase in the number of zombie companies — firms that owe more on debt than they generate in profits but are kept alive by relentless borrowing.

Why it matters: "Zombie firms are smaller, less productive, more leveraged and invest less in physical and intangible capital," the Bank for International Settlements concluded in a report last month.

• "Their performance deteriorates several years before zombification and remains significantly poorer than that of non-zombie firms in subsequent years."

In other words: More zombies will lead to a slower, less efficient and less productive global economy.

Background: The number of zombies globally increased in 2019 for the third straight year and was on pace to reach one in five S&P 500 companies in the U.S. this year before the pandemic.

• The BIS report also noted that among publicly traded small and midsized companies, "the share of assets, capital and debt sunk in zombie firms is as high as 30%-40%."

By the numbers: Much has been made of the fact that the U.S. national debt now exceeds the country's GDP, but U.S. companies have increased their debt load to 90% of the country's GDP, up from 75% in the fourth quarter of 2019, economists at the Institute of International Finance note in a recent report.

• In the first half of the year, non-financial corporates piled up some $1.4 trillion of new debt, bringing the total debt load to a record high of $17.6 trillion.
• Outstanding bank loans to small and midsized companies rose to more than $400 billion and now is more than $6.5 trillion, or 34% of GDP.

The U.K. economy grew 2.1% in August on a monthly basis, well below expectations of 4.6% growth, after strong expansions in July, June and May that followed a record 19.5% plunge in April. (CNBC)

A day after tweeting that he was calling off talks for a coronavirus stimulus bill, President Trump told House Minority Leader Kevin McCarthy he wanted a "big deal" with Speaker Nancy Pelosi. (Axios)

Coinbase says 60 of its employees (about 5%) decided to take an exit package after the company declared itself a largely politics-free zone, and its CEO says the final number will likely be higher. (Medium)

The Trump administration is appealing a federal court injunction that blocked its order banning TikTok. (WSJ)

Bond yields are rising in the U.S. but falling in Europe as investors are betting on a new round of central bank policy divergence.

What's happening: Benchmark U.S. 10-year Treasury yields are holding near their highest since early June.

• Yields jumped after minutes from the Fed’s September policy meeting did not mention plans to shift quantitative easing bond purchases toward longer-dated maturities, which many investors had been pricing in for months.

On the other hand: European government bond yields have been declining in most countries, with the exception of the U.K., as investors bet a second wave of COVID-19 infections could move the European Central Bank to cut interest rates again (below their current -0.5%) or increase asset purchases for the third time this year.

• ECB President Christine Lagarde warned this week that a second wave could undermine the eurozone’s economic recovery.

Watch this space: The spread between yields on U.S. 10-year government debt and comparable German debt reached 129 basis points Thursday, its widest level since mid-March.

By the numbers: Spreads between German 10-year yields and other yields in Europe are narrowing, according to Tradeweb data.

• The German-Italian 10-year spread contracted Thursday to its tightest since early 2018 with the spread between German and Portuguese, Greek and Spanish bonds all also tightening notably in recent days.

Axios' Felix Salmon, Courtenay Brown and I write: One group of Americans needs a fresh stimulus package more than any other: The 2.4 million Americans — and rising — who have been unemployed for more than six months.

Why it matters: While the economic recession looks like it ended in April, rising long-term unemployment acts as a drag on the broader economy. Without new stimulus, the number of jobless could end up being almost as bad as the Great Recession of 2008-9.

What they're saying: Harvard projections show long-term unemployment peaking in early 2021. Depending on the speed of the recovery, it's likely to reach 3.9 million people at best — and 5.1 million in a worst-case scenario.

• Mark Zandi, chief economist at Moody’s, sees a peak of 5 million long-term unemployed as a baseline scenario, cautioning that with stimulus talks having broken down, the number could be more than double that “if we botch it.”

In normal times, the longer you're out of work, the more difficult it becomes to find a job. Employers don't like to hire people with large gaps in their résumé, or whose skills might be outdated or rusty.

• Those rules don't necessarily apply in a pandemic. "Scarring effects on the labor force have also been less severe than feared," wrote Goldman Sachs economist David Mericle in a research note this week.

The other side: There are 4.8 million Americans who are weeks away from being considered long-term unemployed, and more than 1 million have filed initial jobless claims (including the Pandemic Unemployment Assistance program) every week for the past six months.

• So, "where long-term unemployment peaks depends on the virus and depends on policy," Zandi says.

In April, for the first time since 2001, fewer than 1 million people were unemployed for more than six months.

• That same month, the surge of coronavirus-related layoffs peaked. Today almost 1.5 million of those laid-off workers are still unemployed, and the ranks of the long-term jobless are rising at a rate not seen since the financial crisis.
• The biggest job losses have been in leisure and hospitality, where the workforce is 3.8 million people smaller than it was in February. The food services industry is down 2.3 million jobs.

The big picture: Unlike in the early months of the pandemic, now rather than "falling off a cliff," the economy is worsening gradually, says Julia Coronado, president of MacroPolicy Perspectives.

• "It is a grinding scenario of businesses that have to resize themselves to survive and the people that get let go in the process having to figure this out."
• "I know lots of people in this boat and it sucks and it’s hard and it means they can’t do other things that are helpful to the economy like rent an apartment or buy things."
• "And it means that they have to rely on family and friends to get through and it’s a drag on the recovery."

More than 25.5 million people were collecting unemployment benefits as of mid-September, and nearly 1.3 million people filed first-time jobless claims last week — more than 800,000 for traditional unemployment and 464,000 for the Pandemic Unemployment Assistance program.

• That number excluded any new claims from the largest state in the country, California, which paused its program to implement fraud prevention technology and comb through a backlog of claims that had reached nearly 600,000 and was growing by 10,000 a day.

Stay woke: California isn't the only place where issues with unemployment claims are rising.

• The persistently high number of claims drive an uneasy contrast with the continued decline in the unemployment rate and improving numbers on the Job Opening and Labor Turnover Survey to the point that University of Oregon economist Tim Duy says, "We should be more skeptical about the initial claims data."
• "The claims data lets you view the current environment as a repeat of the last recovery," Duy writes in his Fed Watch blog.
• "If the claims data is deeply corrupted, the conventional wisdom is just plain wrong. I keep saying the same thing: This isn’t the 2007-09 recession or the 2009-2020 recovery. It’s something different."