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High Bond Yields Threaten to Double Drag on US Economic Growth by 2027 Warns Goldman Sachs
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News18•20-10-2026, 08:15
High Bond Yields Threaten to Double Drag on US Economic Growth by 2027 Warns Goldman Sachs
- •Goldman Sachs reports that persistently high bond yields could more than double their drag on US economic growth in 2027, reducing it by over 0.5 percentage points if borrowing costs stay near current levels.
- •Economists expect the US economy to grow near its potential rate of 2.3 percent in 2027, but caution that elevated financing costs will pressure housing, consumption, and business investment.
- •Moody's Analytics Chief Economist Mark Zandi warns that the US economy is vulnerable, citing weak hiring and stagnant real wage growth that could severely impact household purchasing power.
- •Higher refinancing costs could reduce business investment growth by 0.3 percentage points or more in 2027, adding further strain to corporate expansion.
- •Despite macroeconomic pressures, artificial intelligence infrastructure investment remains resilient, though rising leverage and financing links in the AI sector pose potential risks.
Key Questions Answered
Goldman Sachs estimates that higher interest rates will reduce US economic growth by approximately 0.2 percentage points in 2027 under its baseline scenario, and just over 0.5 percentage points if borrowing costs remain near current levels.
Higher refinancing costs are estimated to reduce business investment growth by around 0.3 percentage points in 2027 and subsequent years, with the impact potentially more than doubling if borrowing rates stay near current levels.
Mark Zandi described the US economy as vulnerable rather than resilient, noting that underlying labour market and household fundamentals point to very tenuous growth due to weak hiring and stagnant or declining real wage growth.
