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<ul class="summary-list"><li>Non-financial corporate defaults almost tripled from 2022 to 2023, Moody's said.</li><li>Analysts expect defaults to climb further in 2024.</li></ul>Defaults among non-financial corporations nearly tripled in 2023 compared to the year prior, and Moody's Analytics expects the trend to continue in the new year.According to a note from the rating agency published Wednesday, defaults jumped from 31 in 2022 to 92 in 2023, which marks the highest total annual tally since the pandemic started in 2020.Through the Federal Reserve's rate-hiking cycle that started in 2022, tighter financial conditions have squeezed companies' ability to borrow and repay debt. And while markets anticipate policymakers to make five to six rate cuts this year, <a href="https://markets.businessinsider.com/news/stocks/stock-market-crash-fed-rate-cuts-economy-investors-1987-finance-2024-1">history suggests the Fed may not meet those expectations</a>. Last year, Moody's issuer-weighted default rate came in at 5.6%, and analysts expect that to tick up to 5.8% in early 2024 for US speculative-grade firms.By the end of the year, they expect that to revert to its historical average of about 4%. "Our forecast reflects a slowing US economy and higher-for-longer interest rates, because the pace of interest rate cuts will likely be gradual in the upcoming year," Moody's analysts said.<div type="image" title="Moody's default tracker showed defaults surged in 2023" height="570" width="1861" msid="107301953" hostid="261" sizebytes="53268"></div>Based on the data from the fourth quarter of 2023, Moody's found: <ul><li>Half of the defaults were repeat defaulters</li><li>Private-equity-backed companies led the way in the quarter</li><li>The media sector stood out with three defaults in the quarter </li></ul>The surge in defaults over the last 12 months impacted more than $91 billion in total defaulted debt, Moody's said, up from $38 billion the previous year."Looking ahead, the telecommunications and durable consumer goods sectors are expected to face the most challenges, with the highest default rates projected for 2024," the analysts said.In any case, <a href="https://www.businessinsider.com/economy-us-gdp-inflation-federal-reserve-economic-growth-canada-germany-2024-1">the US continues to show broad signs of strength</a>. While <a href="https://markets.businessinsider.com/news/stocks/stock-market-recession-outlook-economy-bear-investors-consumer-finance-credit-2024-1">the bear case</a> for markets and the economy is still on the table, Wall Street has ramped up its <a href="https://markets.businessinsider.com/news/stocks/2024-stock-market-investment-outlooks-wall-street-prediction-roundup-sp500-2023-11?_gl=1*13enl3g*_ga*MjA5NTAyMzYyOS4xNjYyNDcwMDc5*_ga_E21CV80ZCZ*MTcwMTg3NDMwMS4xNDU5LjAuMTcwMTg3NDMwMS42MC4wLjA.&amp;utm_source=copy-link&amp;utm_medium=referral&amp;utm_content=topbar">soft-landing calls</a> over recent months.In fact, <a href="https://www.businessinsider.com/economy-us-gdp-inflation-federal-reserve-economic-growth-canada-germany-2024-1">the US economy is outperforming</a> just about every other wealthy nation in the world. For the fourth quarter, US real GDP came in at 3.3%, squarely above the consensus expectations for 2.0%.

Defaults skyrocketed last year to the highest tally since the start of the pandemic - and 2024 is set to bring more pain to corporations

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Defaults skyrocketed last year to the highest tally since the start of the pandemic - and 2024 is set to bring more pain to corporations

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