Goldman Sachs estimates higher interest rates would cut US economic growth by about 0.2 percentage points in 2027 under its baseline scenario. If borrowing costs stay near current levels, the drag would rise to just over 0.5 percentage points, more than double. Goldman expects US growth close to its estimated potential rate of 2.3% in 2027, but warns that higher financing costs could weigh on housing, consumption and business investment. Moody's Analytics chief economist Mark Zandi calls the US economy vulnerable rather than resilient, puts the odds of vulnerabilities pushing it 'completely off the rails' at about one in three, and cites weak hiring and stagnant or declining real wages. Goldman also estimates higher refinancing costs could cut business investment growth by about 0.3 percentage points in 2027 and later years, while AI infrastructure investment has stayed resilient despite flagged risks from rising leverage.
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Original headline: High bond yields could more than double drag on US growth in 2027 : Goldman Sachs
Read the original on indiagazette.com ↗
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- High bond yields could more than double drag on US growth in 2027 : Goldman Sachs
Goldman Sachs warns that persistently high bond yields could more than double their drag on US economic growth in 2027. Under its baseline scenario, the impact is about 0.2 percentage points, but if borrowing costs stay near current levels, it would rise to just over 0.5 percentage points. Goldman expects US growth close to its potential rate of 2.3% in 2027, though the outlook could face pressure if yields remain elevated. Moody's Analytics Chief Economist Mark Zandi views the US economy as vulnerable, putting the odds of it going 'completely off the rails' at about one in three. Higher refinancing costs could also cut business investment growth by around 0.3 percentage points, while AI infrastructure spending is expected to stay healthy despite rising leverage risks.
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Goldman Sachs estimates that persistently high bond yields could more than double the drag on US economic growth in 2027, from around 0.2 percentage points in its baseline to just over 0.5 pp if rates stay at current levels. It expects US growth to be close to its potential rate of 2.3% in 2027, but warns that higher financing costs could weigh on housing, consumption and business investment. Higher refinancing costs could also cut business investment growth by about 0.3 pp, an impact that could also more than double. Mark Zandi of Moody’s Analytics calls the US economy vulnerable rather than resilient and puts the odds of it going “completely off the rails” at around one in three. AI infrastructure investment has stayed resilient despite higher rates, though the report flags rising leverage risks.
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