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Data: Datastream, Worldscope, DB Global Research; Chart: Axios Visuals

The number of so-called zombie companies is spiking and could soon represent more than one in five U.S. firms, thanks to the coronavirus pandemic.

What it means: "Zombies" are firms whose debt servicing costs are higher than their profits but are kept alive by relentless borrowing.

What they're saying: "This is a macroeconomic problem because zombie firms are less productive, and their existence lowers investment in and employment at more productive firms," Deutsche Bank Securities chief economist Torsten Sløk said in a note to clients Thursday.

  • "In short, one side effect of central banks keeping rates low for a long time is that it keeps more unproductive firms alive, which ultimately lowers the long-run growth rate of the economy."

What's next: "This trend ... is likely to continue going forward given the Fed’s commitment to keeping rates low and the ongoing support from the Fed to credit markets."

Go deeper: Corporate debt issuance has already topped $1 trillion in 2020

Go deeper

Sep 22, 2020 - World

Study: China's economic policies directly harmed U.S. industries

Illustration: Eniola Odetunde/Axios

China's economic planning and targeted subsidies have increased the competitiveness of Chinese firms in the global economy to the direct detriment of U.S. industry, an academic study has found.

Why it matters: When it comes to American industries and workers, the rise of Chinese industrial policy hasn’t been a win-win — researchers found for every 100 factories opened in China, 12.5 U.S. factories in the same industry closed.

Erica Pandey, author of @Work
1 hour ago - Economy & Business

What's really going on with the labor market

Source: YCharts

The labor market is showing some signs of improvement: Jobless claims fell to 730,000 — a dramatic drop from 841,000 the previous week. And the latest jobs report showed a pandemic-era low unemployment rate of 6.3%

But, but, but: That's not the full story, experts say.

Felix Salmon, author of Capital
2 hours ago - Economy & Business

Markets see rare convergence milestone

Expand chart
Data: YCharts; Chart: Axios Visuals

A milestone was reached in the markets Thursday: The yield on the 10-year Treasury note rose to match the dividend yield on the S&P 500

Why it matters: The two yields have been inverted since the beginning of last year, which is historically unusual.