Hidden stress in private lending is roughly twice as bad as the official numbers suggest, which is bad news for workers at debt-funded companies and for the Fed's hopes of a soft landing.

• JP Morgan found the real trouble rate in private credit is around 16%, not the 1–3% being reported.
• The gap comes from companies paying lenders with stock instead of cash, pushing out loan deadlines, or having their debt trade at a steep discount — all ways of staying alive until rates fall.
• With government bond yields near multi-decade highs, that stalling tactic is getting harder, and the private credit market is worth about $1.3 trillion.
• AI lending looks shaky too: CoreWeave's bonds now yield junk-level returns, and the company has far more bills coming due than cash on hand.
• The private credit side is the bigger danger, because those zombie companies leave nothing behind when they die — just permanent layoffs, while a failed AI firm still has chips and servers buyers would fight over.

Outlook: Expect more quiet bankruptcies and layoffs among debt-funded private companies unless interest rates come down, with the AI build-out holding up better than the headlines imply.