Blue-chip U.S. companies are slowing down on borrowing after months of massive bond sales and hanging onto the money they've raised to insulate themselves from the pandemic.

The biggest U.S. banks hardly sold any notes after posting earnings, a time when they often issue heavily. Overall, corporate bond sales in July dropped by a third to about $60 billion from the same time last year, according to data compiled by Bloomberg.

Corporations' reluctance to spend now reflects the intensity of the downturn that the Covid-19 pandemic is triggering. The U.S. economy shrank at an annualized pace of 32.9 percent in the second quarter, the steepest drop since at least 1947, according to a report issued Thursday. Any slump in corporate expenditure will only make the downturn worse, and underscores the limits of the Federal Reserve flooding the financial system with money if parties are wary of spending.