Since last March, the stock market has declined severely, meaning that of course interest rates have skyrocketed. This has affected both business profitability and the stock market in huge ways.
To business owners, this means less profit potential right off the bat for those who have taken out loans in the past. These new interest rates will take out money out of the pockets of business owners. Not only will it affect the top of the pyramid, but all the way down through as well, right down to the sale of the goods and/or services. Because of wages being lowered in some scenarios, this forces firms to raise prices on good and services, and forces households to pay more for sometimes necessary goods, otherwise known as inflation.
Rise in interest rates can also hit some sectors of the economy differently than others. For example, the real estate industry has taken a huge hit, as housing prices continue to climb. To make matters worse for them, building supplies and labor has become more expensive as well, leading to less and less profit for these companies.
This also leads to businesses selling more stock, or taking out more loans in order to keep their business running. When the interest rates are higher, the interest expense that needs to be met makes a company even less profitable.
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