• Grace Sun, a 16-year-old from Kentucky, won $75,000 for her research on biomedical devices.
• She took home the top prize at the ISEF — the "granddaddy of all science fairs."
• Her work on organic electronic devices aims to make medical implants safer and more effective.

Grace Sun can't drive yet. Unlike many 16-year-olds, getting her license hasn't been her top priority. Instead, she's been busy working on a project to revolutionize biomedicine.

The high schooler from Lexington, Kentucky, developed a new technique to improve organic electronic devices. The technology could someday make medical implants significantly more compatible with human bodies and far less invasive. It could also lead to new early-diagnosis tools for a wide variety of diseases.

On Friday she won $75,000 for her research.

"They called my name. I thought they got the wrong person. I was like, is there another Grace up here?" Sun told Business Insider backstage at the Regeneron International Science and Engineering Fair (ISEF) awards ceremony.

Her hands were trembling and a huge smile beamed across her face. Just minutes before, rainbow confetti had exploded behind her on stage in front of hundreds of her peers, while lights flashed and peppy music boomed over the audience. She suddenly held a trophy in her hands.

"I'm in disbelief because of how good everyone else is," she said.

Despite the exhilaration, though, Sun easily slipped into a calm and authoritative demeanor to explain her research, which focused on organic electrochemical transistors, or OECTs.

"They have performance issues right now," she said of the devices. "They have instability in the body. You don't want some sort of implanted bioelectronic to degrade in your body."

But OECTs have huge potential. Compared to other devices made of silicon, they're soft and flexible. That makes them a better fit for heart and brain implants.

"They're so much more accurate, their speed is higher, their performance is higher because they consider signals in the body that previous electronics haven't considered. They're also safe because they're made of organic materials," she said.

She hopes that her work improving their performance can be a first step to commercializing them and getting them into wide use, within the next two decades.

Sun won the Olympics of science fairs

ISEF is the world's biggest pre-college STEM competition, run by the Society for Science. It's like the Olympics of science or the "grandaddy of all science fairs," said judging chair Christopher Gould.

Nearly 2,000 students spent the week in Los Angeles attending talks, mingling, and defending their research to judges. The event doled out $9 million in awards this year — its largest purse yet. But Sun took home the biggest sum with the $75,000 George D. Yancopoulos Innovator Award.

"This was our number one project, without a shadow of a doubt," Ian Jandrell, a judging co-chair for the materials science category at ISEF, told BI about Sun's research. He oversaw hours of discussion among the materials-science judges.

"It was crystal clear that that room was convinced that this was a significant project and worthy of consideration for a very top award because of the contribution that was made," he said.

Research at ISEF is not peer-reviewed, so it's not held to the standard that studies published in journals like Nature or JAMA must meet. Instead, ISEF encourages students to learn about the scientific process by doing it themselves and defending their work.

Jandrell said the judges were impressed by "the sophistication and the diligence" of Sun's research and her ability to explain it and respond to questions on the spot.

"It's the whole package," he added.

Long days in a university lab

Sun has been working on her project for over six months. It took long hours, and much of it needed to be done in a lab at the University of Kentucky. The devices she worked on were tiny, small enough to fit on your thumb.

For a few weeks, she left school three hours early to work in a lab for another five hours. Luckily, her teachers were understanding about why she needed extensions on some of her assignments.

Sun engineered a new technique to improve the devices' performance and take them closer to commercial use. In the research that snagged the five-figure award, Sun tried "doping" the OECTs — introducing chemical impurities to see how they affected the device's electrical properties — with a series of organic salts.

She found that one salt, called tetrabutylammonium chloride, was especially effective because it improved the device's amplification abilities, sensitivity, signal-to-noise ratio, and switching speed.

These qualities are important because they improve overall performance, which could one day help create biomedical devices capable of detecting early hints of disease in your body's biochemical makeup.

The salt that Sun tested improved amplification performance by 97% and switching speed by 77%, Sun found. "These are significant numbers," Jandrell said.

Sensitive OECTs could detect proteins or nucleic acids that correspond with the disease long before traditional symptoms appear. Sun imagines OECTs embedded in clothing to monitor swea or used to accurately test blood-alcohol levels before you drive.

Eventually, OECTs could lead to new technologies that replace invasive implants like pacemakers.

As for Sun, she sees a future for herself in chemical engineering to help improve medicine.

"Hopefully I can make some sort of commercializable breakthrough, like what I'm trying to do now with these devices," Sun said. "If possible, I do want to start a business so that I can get them into the real world in industries to impact more people directly."

• Commercial ships have diverted from the Red Sea over the Houthi missile threats. 
• The Houthis showed in late April they can strike ships in the Indian Ocean.
• "By disrupting shipping, the Houthis can impose costs on the global economy," a naval expert said.

Houthi militants showed in late April that they can expand their war on international shipping far beyond the Red Sea.

The container ship MSC Orion came under a drone attack on the night of April 26 as it was steaming in the Indian Ocean southeast of the Horn of Africa, the continent's eastern-most tip. The attack only caused minor damage and did not harm any crew. But the distance involved was unprecedented.

The Houthis have wreaked havoc against international shipping in the Red Sea with ballistic missiles and exploding drones, and threatened in March they could menace ships that avoided this route by going around Africa's southern Cape of Good Hope, a much longer and more expensive voyage.

"The Houthis have drones that can travel more than 1,000 nautical miles, such as the Shahed series of propellor-driven drones," Bryan Clark, a senior fellow at the Hudson Institute and expert on naval operations, told Business Insider. "Their ballistic missiles have ranges of more than 600 [nautical miles]."

The long-range attack on the Orion appears to have been a one-off but is still unprecedented, an expert on drone warfare said.

"The attack was different in the fact it was achieved over a greater distance than previous attacks on international shipping," James Patton Rogers, the executive director of the Cornell Tech Policy Institute, told Business Insider. "This shows advances in range, command and control, and accuracy, all of which are occurring despite US-UK efforts to degrade the group."

Rogers believes the Houthis may have used a long-range Shehab drone in the attack.

"Until now, the Shehab drones have proven vulnerable to air defense and unreliable," Rogers said. "As such, if Shehab drones were used in the strikes, which the video evidence appears to show, then it would mark an increase in the reliability and destructive precision of these drone systems."

He noted that the Shehab's reported range of 990 miles puts it "well within range" of international shipping. The US and EU have stood up naval task forces to guard ships in the Red Sea, but merchant ships far outside of these air defense umbrellas have no defense against an attack drone.

"Yet these are not the only systems available to the so-called' axis of resistance' groups," Rogers said. "The Samad (1500km/932 miles) and potentially the Shahed (2000km) family of drones all have the range to strike these targets."

Searching and targeting ships in international waters is also another escalation from the group's attacks near the Red Sea. The Houthis are most likely exploiting the self-reporting of merchant ships to target them.

"The Houthis appear to be using AIS (Automatic Identification System) data to geolocate their targets and use GPS to guide their drone to the approximate area," Clark said. "Reportedly, drones like the Shahed series have anti-radiation seekers they can use to drive into emitting targets like air defense radars."

The Orion stopped transmitting its AIS after the April 26 attack, likely to prevent the Houthis from tracking the ship for a second strike. Clark also believes ships like the Orion may opt for "going dark" for segments of their voyage to avoid being tracked. Ships smuggling Russian oil have done this since the start of the current Ukraine war in 2022.

There are some ways these ships can evade such attacks or, if necessary, physically fend them off.

"They could turn off their AIS and radar, which would make them hard to find in the open ocean of the Eastern Mediterranean," Clark said. "Once they enter the Red Sea, though, ships can be tracked by spotters ashore or on boats or using mobile Houthi radars ashore. In that case, shotguns or high-power microwave counter-drone weapons would be needed."

Ships may opt for alternative or longer routes to avoid these attacks, and while this may reduce the number of attacks, that would also have a disruptive impact on shipping of the kind the Houthis would welcome.

"The easiest, although more expensive, way to address this threat is to avoid it," Clark said. "Unfortunately, that is what the Houthis want. By disrupting shipping, the Houthis can impose costs on the global economy and put pressure on Israel."

US forces targeting the Houthis in February encountered an undersea drone for the first time and successfully struck it.

"There are few details about the Houthi's underwater drone capacity, but what there is suggests the drones are slow-moving and more useful against stationary targets, ships vulnerable in dock," Rogers said. "Nevertheless, with the rate of Houthi advances, and increases in speed, control, and maneuverability in-transit, international shipping could soon prove vulnerable."

Clark doesn't see undersea drones posing much of a threat to ships on the high seas.

"Undersea drones are really only a threat in narrow waters like the Red Sea where the range to shore is short," Clark said. "Undersea drones can only travel a few knots and therefore cannot catch up to a cargo ship. The drone has to intercept the target, which requires knowing where the target is going, such as in a narrow waterway."

Rogers believes the broader implications of the Orion attack are already clear.

"Violent non-state groups are not only able to strike shipping hundreds of miles from shore, but they are able to pass this technology on to other groups allied with the cause or willing to pay a price," Rogers said.

"In essence, we have reached a stage where the proliferation of this capacity is uncontrolled and unchecked, potentially bringing international shipping and global supply chains under increased threat globally."

• Reports of a slim iPhone arriving in late 2025 are emerging.
• An analyst's note and a report from The Information suggest an "iPhone 17 Slim" is in the works.
• Apple launched its thinnest iPad last week, while the iPhone 16 is expected to launch in September.

Apple is reportedly slimming down the iPhone in 2025.

The Information reported Friday that five people knowledgeable about the project said a thinner iPhone could debut alongside the iPhone 17 in September 2025.

The project, internally called D23, is said to be a "major redesign" that will cost more than the iPhone Pro Max, which is priced at $1,200, The Information reported. Meanwhile, the full iPhone 16 lineup is still yet to be announced, but it is expected this September.

Rumors of a slim iPhone, based on a research note from analyst Jeff Pu of Hong Kong-based investment firm Haitong that was viewed by 9to5Mac, have swirled since the beginning of May.

One of the supposed models in the rollout could be called "iPhone 17 Slim," MacRumors reported. The device's display would measure between 6.12 inches diagonally — the size of the standard iPhone — and 6.69-inch screen of the Pro Max models, according to The Information.

Another notable difference on this prospective skinny iPhone is that the back camera would be located at the top center of the phone instead of the top left corner, The Information's sources said.

At its "Let Loose" event on May 7, Apple launched a new iPad Pro that it touted as thinner than an iPod Nano at 5.1 millimeters. So far, reviewers have reacted positively to the new ultra-thin OLED display.

Tech review channel JerryRigEverything went viral for its durability test of the 13-inch iPad Pro. The slim iPad's OLED display held up against several attempts to bend and break it.

Reviewer Zack Nelson said the iPad's "central spine" helped it remain functional after being bent.

The tech giant faces stiff competition from other smartphone makers. iPhone revenue for Apple's fiscal Q2 was $45.96 billion, down 10% year over year.

Apple did not immediately respond to a request for comment from Business Insider.

• Jeff Bezos' Blue Origin plans to launch a crewed rocket for the first time in nearly two years.
• The New Shepard rocket was grounded for months after a failed uncrewed launch in September 2022.
• The delay has let space tourism competitors like Virgin Galactic catch up. 

Jeff Bezos' private space company, Blue Origin, recently announced its plans to launch a crew of six aboard its New Shepard rocket this Sunday.

If all goes well, this will be the company's first crewed rocket launch in nearly two years. The last crewed flight was in August 2022 and included Sara Sabry, who became the first Egyptian person and Arab woman in space.

This weekend's scheduled launch will be a major milestone for the company; marking its return to crewed suborbital spaceflight and the multi-millions in revenue that comes with it.

Still, late last year, Jeff Bezos told Lex Fridman on Fridman's podcast that "Blue Origin needs to be much faster."

Here's why Blue Origin is lagging behind competitors like Virgin Galactic and SpaceX.

Why Blue Origin's upcoming launch took 2 years

Blue Origin was on a roll in 2021 and the first half of 2022, completing about one New Shepard launch every two months — the most in the company's history.

But then one of its uncrewed rockets failed on September 12, 2022.

About one minute into the flight, Blue Origin lost the first-stage booster due to a faulty nozzle in the booster's engine. The first-stage fell from the skies and crash-landed in a Texas desert. No people, buildings, or other properties were harmed.

What was damaged, however, was the space company's momentum.

Afterward, the Federal Aviation Administration grounded New Shepard until Blue Origin addressed 21 corrective actions, including redesigning some engine and nozzle components to prevent a similar mishap.

The space company went more than 400 days before another launch. That gave one of Blue Origin's competitors, Virgin Galactic, time to catch up after suffering its own setbacks in the early 2020s.

Blue Origin's suborbital business

Virgin Galactic and Blue Origin are both in the suborbital space tourism business. They fly people to suborbital space, about 60 miles high, where they can experience a few minutes of weightlessness before returning.

In 2023, Virgin Galactic completed half a dozen crewed launches with its SpaceShipTwo vehicles. These launches included the company's first commercial service flight with Italian Air Force members in June 2023 and its first flight carrying a private astronaut in August of that same year.

The company was grounded in February, however, after a small part fell off the mothership of its space plane on Virgin Galactic's latest space tourism flight. So, this Sunday's launch may be Blue Origin's chance to catch back up.

However, the cost of a ticket on Blue Origin's rocket versus Virgin Galactic's space plane is worth noting regarding the companies' competitiveness.

Prices vary widely, and Blue Origin won't release what it charges per seat on New Shepard. However, Quartz reported that a seat on Blue Origins' last crewed launch in August 2022 cost about $1.25 million. That's nearly three times the cost of a $450,000 seat on Virgin Galactic.

Blue Origin's orbital dreams and delays

While suborbital tourism can be lucrative, the real money is in orbital spaceflight.

Private companies, including SpaceX (founded in 2002), United Launch Alliance (founded in 2006), and Rocket Lab (founded in 2006), have been doing this for years.

Getting to orbit requires bigger, more powerful rockets that are more costly and time-consuming to build. But the major benefit is that there's a much larger market for companies who want to send a satellite or other technology into orbit than for floating in a spaceship for a few minutes.

Over their lifetimes, SpaceX has launched more than 300 rockets to orbit, ULA has launched 155, and Rocket Lab has launched over 45. Blue Origin, by comparison, has yet to launch one rocket to orbit — though its New Glenn orbital rocket is scheduled for its first launch later this year.

Bezos' company announced it was building New Glenn in 2016, with an inaugural launch scheduled for 2020. However, the company has suffered a series of setbacks, delaying lift-off.

These delays have cost Blue Origin potentially millions of dollars in service flights that companies are willing to pay to get their tech to orbit. ULA, for example, states on its website that its rockets have "placed more than $70 billion of satellite assets into orbit."

That said, Blue Origin has contracts with NASA, the US Space Force, and Amazon for its New Glenn rocket once it's ready to fly.

Bezos says Blue Origin's culture isn't fast enough

Part of Blue Origin's sluggish pace is its work culture, which Bezos aims to change.

"We're going to get really good at taking appropriate technology risk and making those decisions quickly, being bold on those things and having the right culture that supports that," Bezos told Fridman.

Sunday's scheduled launch is a step in the right direction for Blue Origin. It may be playing catch-up now, but Bezos wants to kick the company into high gear, telling Fridman that's one of the reasons he left his role as Amazon's CEO.

"I turned the CEO role over, and the primary reason I did that is that I could spend time on Blue Origin, adding some energy, some sense of urgency. We need to move much faster, and we're going to," he said.

Blue Origin did not respond to Business Insider's request for comment.

• There's no love lost between Elon Musk and Mark Zuckerberg. 
• The CEOs have been feuding since 2016, when a SpaceX explosion destroyed a Facebook satellite.
• Here's a history of their feud.

For nearly eight years, two of tech's biggest names — Elon Musk and Mark Zuckerberg — have been caught up in a feud, clashing over topics like artificial intelligence and rockets.

The two men have been griping about each other behind closed doors for years, according to The Wall Street Journal. But the tech moguls haven't exactly kept their rivalry a secret from the public, either.

When a rocket from Musk's SpaceX exploded and destroyed a satellite from Zuckerberg's Facebook in 2016, Zuckerberg issued a heated statement, saying he was "deeply disappointed" about SpaceX's failure. And when Facebook became embroiled in the Cambridge Analytica scandal, Musk publicly deleted his companies' Facebook pages, tweeting that the company gave him "the willies."

In June 2023, the two men threatened to make their fight physical and face each other in a cage match.

The two billionaires are among the richest people on the planet, placing them in an elite circle, even by Silicon Valley standards. Even though both work in artificial intelligence and social media, and their companies have partnered in the past, it seems there's no love lost between Musk and Zuckerberg.

Here's where their feud began and everything that's happened since.

The Musk-Zuckerberg feud dates back to at least 2016, when a SpaceX rocket explosion destroyed a Facebook satellite.

In September 2016, SpaceX was testing its Falcon 9 rocket at a launch site in Cape Canaveral, Florida. Shortly after 9 a.m. the rocket exploded, destroying Facebook's AMOS-6 satellite, which was supposed to ride the rocket into space.

The satellite was part of Facebook's Internet.org project to deliver internet connectivity to the developing world, and it would have been Facebook's first satellite in orbit.

Zuckerberg seemed openly frustrated that the launch failed, writing on Facebook that he was "deeply disappointed to hear that SpaceX's launch failure destroyed our satellite that would have provided connectivity to so many entrepreneurs and everyone else across the continent."

Two years later, Musk addressed the failed launch in a post on Twitter to the reporter Kerry Flynn.

"Yeah, my fault for being an idiot," Musk said. "We did give them a free launch to make up for it, and I think they had some insurance."

In 2017, Zuckerberg criticized Musk's attitude toward artificial intelligence, which seemed to get a rise out of Musk.

During a Facebook Live broadcast, a viewer asked Zuckerberg for his thoughts on Musk's anxieties around AI.

"I have pretty strong opinions on this," Zuckerberg said. "With AI especially, I'm really optimistic, and I think that people who are naysayers and try to drum up these doomsday scenarios … I don't understand it. It's really negative, and in some ways, I actually think it's pretty irresponsible."

Musk, who has repeatedly called for regulation and caution when it comes to new AI technology, shot back on Twitter.

"I've talked to Mark about this," he said in response to a tweet about Zuckerberg's comments. "His understanding of the subject is limited."

In 2018, following Facebook's Cambridge Analytica scandal, Musk made a public show of deleting SpaceX and Tesla's Facebook pages.

After the WhatsApp cofounder Brian Acton tweeted, "It is time. #deletefacebook," Musk responded, "What's Facebook?"

A fan responded to Musk's tweet asking whether he'd delete the SpaceX Facebook page, to which Musk responded, "I didn't realize there was one. Will do."

After another fan pointed out that Tesla had a Facebook page too, Musk tweeted that it "looks lame anyway."

Soon after, both the SpaceX and Tesla pages disappeared from Facebook. Musk said it wasn't a "political statement" and that he just found Facebook unsettling.

—Elon Musk (@elonmusk) March 24, 2018

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Musk continued his campaign against Facebook in early 2020.

 

In response to a tweet from the actor Sacha Baron Cohen, which called for more regulation of Facebook, Musk urged people once again to delete the app.

—Elon Musk (@elonmusk) February 8, 2020

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Following the riot at the US Capitol in 2021, Musk used Twitter to share memes linking the riots to Facebook.

On the evening of the rampage in Washington, Musk tweeted, "This is called the domino effect," along with an image of dominoes, with the first one labeled "a website to rate women on campus," a reference to Facebook's inception at Harvard University. The last domino referenced the rioters.

Musk also criticized Facebook's data-sharing practices, tweeting another meme about Facebook that mentioned the company "spying" on users following the announcement by Facebook-owned WhatsApp that it would start forcing users to share their personal data with the platform.

—Elon Musk (@elonmusk) January 7, 2021

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Musk tweeted that people should "use Signal," an encrypted messaging app. His tweet was retweeted by Twitter CEO Jack Dorsey, another tech executive who has sparred with Zuckerberg.

Last year, Musk criticized Zuckerberg's ironclad control of Meta.

The Tesla CEO compared Zuckerberg's control of Meta to a monarchy during an interview at the TED conference in Vancouver, British Columbia. (Facebook's parent company changed its name to Meta in October 2021.)

The interviewer, Chris Anderson, asked Musk whether his status as the richest man and one of Twitter's top influencers could pose a conflict of interest if he bought the platform. Musk used the opportunity to take a swipe at his rival.  

"As for media sort of ownership, I mean, you've got Mark Zuckerberg owning Facebook and Instagram and WhatsApp, and with a share ownership structure that will have Mark Zuckerberg the 14th still controlling those entities," Musk said. 

He went on to say that he "won't have that at Twitter."

Tensions appeared to get even higher between the two CEOs after Musk bought Twitter.

In December, Meta first brainstormed ideas for a Twitter competitor in order to capitalize on  Musk's chaotic Twitter takeover, according to a report from The New York Times. The company confirmed to Platformer in March that it's working on its own text-based social network, codenamed "Project 92."

Earlier this month, Meta's chief product officer, Chris Cox, appeared to mock Musk and Twitter by saying in an all-hands meeting that it the site will be "a platform that is sanely run."

Musk hasn't taken kindly to the news that Zuckerberg is creating an X competitor.

The billionaire taunted Zuckerberg on X, formerly Twitter, about his rival text-based social media platform.

"I'm sure Earth can't wait to be exclusively under Zuck's thumb with no other options," Musk posted in June.

Later writing: "Zuck my" with a tongue emoji.

—Elon Musk (@elonmusk) June 21, 2023

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Zuckerberg offered some rare praise for Musk and his plans for X in June 2023.

On an episode of "The Lex Fridman Podcast," the Meta CEO praised Musk's "push early on to make Twitter a lot leaner."

"I think that those were generally good changes," Zuckerberg said on the podcast.

When the Tesla CEO took over X, he more than halved the company's workforce. Zuckerberg has taken similar cost cutting measures at Meta, initiating a series of layoffs and dubbing 2023 the "year of efficiency."

 

The two men have reportedly been grumbling about each other in private for years.

People who have heard each man's private comments about the feud told The Wall Street Journal in a report published last June that Zuckerberg had long yearned for the public recognition Musk has received over the years as a tech pioneer and that Musk has fretted over Zuckerberg's early success with Facebook.

The two men appeared to agree to settle some of their differences in a cage match last June.

Last June, Musk said he'd be "up for a cage match" with Zuckerberg. 

The X owner brought up the idea after X users cautioned him to be careful dissing Zuckerberg since he knows jiu-jitsu.

It's unclear whether Musk was joking about the offer to fight the Meta CEO in a cage match. He said via X, "If this is real, I will do it," but later appeared to poke fun at his own fighting skills.

Zuckerberg appears to be taking the idea of a match seriously. After Musk first posted on X that he would be  "up for a cage fight," the Meta CEO posted a screenshot of the post on Instagram with the words "Send me location," and a Meta spokesperson later told The Verge that Zuckerberg is not joking about the offer.

Only time will tell if the two CEOs will duke it out in person.

Some people have already begun placing odds on the fight. Business Insider's Hasan Chowdhury reported that Musk's chances of beating Zuckerberg are slim. 39-year-old Zuckerberg has been trained in MMA fighting and even won some medals at a jiu-jitsu competition in May 2023.

Zuckerberg said he was ready to fight since the day Musk challenged him.

Zuckerberg said in a Threads post in August 2023 that he was "ready to fight since the day Elon challenged" him. 

"If he ever agrees on an actual date, you'll hear it from me," Zuckerberg said in the post. "Until then, please assume anything he says has not been agreed on."

Musk posted on X two days later that "Zuck is a chicken."

"He can't eat at chic fil a because that would be cannibalism," he wrote in a separate post on the same day.

 

A day after Zuckerberg's 40th birthday, Musk revived the cage-match proposal in a post on X.

Musk's gift to Zuckerberg for his 40th birthday was a challenge to fight him, once again.

"If only Zuckerberg were as tough (sigh). I've offered to fight him any place, any time, any rules, but all I hear is crickets," Musk said in an X post on May 15.

Musk's post was in response to a satirical news story about a face-off between President Joe Biden and former President Donald Trump.

• Fears of a potential banking crisis are on the rise as interest rates stay elevated.
• Interest rates are now at their highest levels since 2001 as the Fed keeps an eye on inflation.
• Markets have already seen 1 regional bank fail this year, according to FDIC data.

Fears of more trouble in the banking sector are on the rise as investors and economists worry that high interest are causing trouble for regional lenders. 

With interest rates at their highest levels since 2001, higher borrowing costs have put pressure on banks' balance sheets as borrowers struggle to pay debts or avoid the credit market altogether. According to Moody's Analytics chief economist Mark Zandi, the longer interest rates stay high, the more the Fed risks damaging the economy. 

"Those rates are corrosive on the economy. They wear the economy down, and at some point, something could break,"  the economist told Yahoo Finance in a recent interview, pointing to the series of bank failures that rocked markets in early 2023. "That's the kind of thing I'm worried about in the context of persistently high interest rates."

High rates have started to impact credit conditions. Bank-financed loans and leases have stagnated over the last year, rising by $226 billion through 2023. That's a snail's pace compared to the prior year when banks tacked on $1.19 trillion in loans and leases. 

Commercial bank loans in late payment rose sharply over the fourth quarter, with the delinquency rate rising to 1.4%, Fed data shows.

Economists are particularly worried about the commercial real estate industry, with nearly a trillion of debt in the sector set to mature by the end of this year. Those loans will likely have to be refinanced at higher rates, which could spark a wave of defaults and stress bank balance sheets. 

Real estate investor Barry Sternlicht said he foresees one bank failure a week if the Fed doesn't lower interest rates soon. 

"The 1.9 trillion of real estate loans, that's a fragile animal right now," Sternlicht said in a recent interview. 

The US has only seen one bank fail so far this year, according to FDIC data. Regulators took over the Philadelphia-based Republic First Bank in April, before selling most of the deposits and assets to regional lender Fulton Bank. 

"You have dozens of small regional banks in America that are exposed to real estate, are writing off loans, and the higher for longer phenomenon is having a direct impact on this second tier of the banking sector in America," Daniel Pinto, CEO of Stanhope Capital said in an interview with Bloomberg this week. "The Fed will very much be aware that if they keep rates at this high level, they may have another banking crisis on their hands."