High Bond Yields to Dampen US Growth in 2027

Goldman Sachs forecasts higher borrowing costs will reduce economic growth by up to 0.5 percentage points by 2027.

Updated on Oct. 20, 2026 in Economic Indicators

High Bond Yields to Dampen US Growth in 2027

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Are rising borrowing costs making it harder for you to manage your own household finances?

A new Goldman Sachs report projects that persistent bond yields will create a drag on the US economy throughout 2027. While current projections estimate a baseline growth impact of 0.2 percentage points, this could more than double if borrowing costs remain at current levels.

Why it matters

Rising borrowing costs exert significant pressure on housing, consumption, and business investment across the United States. This environment, compounded by weak hiring and stagnant real wage growth, threatens to curb household purchasing power and overall expansion.

Goldman Sachs estimates a baseline reduction in US economic growth of 0.2 percentage points for 2027, with business investment growth potentially falling by 0.3 percentage points. The US economy is projected to grow at a 2.3 percent rate.

The players

Goldman Sachs

Goldman Sachs is a leading global investment banking, securities, and investment management firm that provides a wide range of financial services.

Mark Zandi

Mark Zandi is a prominent economist and the chief economist at Moody's Analytics, where he provides research and forecasts on the global economy.

The details

Higher interest rates continue to hinder business investment and limit consumer spending capacity. Despite these headwinds, investment in artificial intelligence infrastructure has remained resilient, and firms are expected to maintain healthy capital expenditure in this sector through 2027.

Economic growth projections and the impact of bond yields are centered on the calendar year 2027.

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Macro View

The current forecast of a one-in-three probability of economic failure follows historical patterns observed during previous periods of significant market volatility. This outlook aligns with analytical frameworks used to assess systemic risks similar to those identified during the 2008 financial crisis.

Increased borrowing costs may lead to tighter household budgets as interest rates influence personal loans and housing affordability. Readers should anticipate that persistent high yields could result in broader economic cooling that affects hiring and wage growth.

The takeaway

Navigating a high-interest rate environment requires prioritizing debt management and financial stability to mitigate potential economic headwinds. Monitoring business investment levels in resilient sectors like AI may offer insights into where market opportunities persist despite broader growth limitations.