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Goldman Sees U.S. Interest-Cost Surge on Yield, Deficit Rise

The Empire State Building and Chrysler Building stand in the Manhattan skyline at dusk in this aerial photograph taken above New York, U.S., on Friday, June 19, 2015. The Standard & Poor's 500 Index fell, with the gauge dropping below its price for the past 50 days, while Treasuries retreated.
Photographer: Craig Warga/Bloomberg
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An historic expansion in U.S. borrowing during a period of economic growth, alongside rising bond yields, will cause a surge in the cost of servicing American debt, according to Goldman Sachs Group Inc.

“Federal fiscal policy is entering uncharted territory,” Goldman analysts including Alec Phillips in Washington wrote in a Feb. 18 note to clients. “In the past, as the economy strengthens and the debt burden increases, Congress has responded by raising taxes and cutting spending. This time around, the opposite has occurred.”