Goldman Sachs Warns High Bond Yields Threaten US Growth

Goldman Sachs released a report warning that persistently high bond yields could more than double their negative impact on United States economic growth in 2027. While the firm's baseline scenario estimates a growth reduction of 0.2 percentage points, the drag could rise to over 0.5 percentage points if borrowing costs remain at current levels.

Economists at the firm expect the economy to grow near its potential rate of 2.3 percent in 2027, but note that elevated yields threaten consumption, housing, and business investment. Specifically, higher refinancing costs could reduce business investment growth by 0.3 percentage points, a figure that could also double under current rate conditions. Investment in artificial intelligence infrastructure is expected to maintain a healthy pace through 2027 despite these pressures.

Mark Zandi of Moody's Analytics provided a more pessimistic outlook, characterizing the economy as vulnerable. He estimated a one-in-three chance that existing vulnerabilities could push the economy completely off the rails.