MSCI released its U.S. distress tracker for the fourth quarter of 2024, written by Executive Director Alexis Maltin and Senior Associate Wyatt Avery. At $107.0 billion — a 24.3% or $20.9 billion year-over-year increase — it’s the largest seen in a decade, but still only a little more than half of the peak during the Global Financial Crisis. Additionally, this is the starting point for 2025.

The good news is that the rate of growth in distress has been slowing since the last quarter of 2023. Put differently, in calculus that would mean the second derivative, or how quickly change happens, is negative. Markets might want an immediate switch to falling distress, but turning down the rate of growth is a mathematically necessary step and important to recognize.

Another important comparison not made frequently enough is noting the difference between the total value of distressed assets and the count of them. Distressed large loans are a problem, but they don’t necessarily indicate a statistical pattern. As MSCI noted, at the end of 2024, the total number of distressed properties was about a quarter of the count at the height of the GFC.