Economists and Wall Street analysts are identifying a growing set of risks that could impact the U.S. economy, despite its recent resilience in the face of inflation and trade challenges. Ed Yardeni, president of Yardeni Research, stated in a September 14 report that higher energy costs, rising bond yields, and persistent inflation are among the factors that may weigh on economic growth and financial markets.
The warnings come as the U.S. national debt surpassed $40 trillion and global tensions continue to affect energy markets. While the economy has continued to expand, Oxford Economics noted that consumer sentiment fell this month to its second-lowest level on record, driven by concerns over gasoline prices and potential tariffs.
Oil prices reached a four-month high on Monday, with Brent crude at $108.45 a barrel and U.S. diesel prices hitting a record $6.23 a gallon, according to AAA data. Goldman Sachs recently suggested that continued hostilities in the Middle East could push oil prices above $120 a barrel. Meanwhile, the Consumer Price Index rose at an annual rate of 3.4% in August, which remains above the Federal Reserve's 2% target.
For the millions of Americans with retirement accounts or stock holdings, a market downturn triggered by these risks could reduce household wealth. Brandon Zureick, chief economist at Johnson Investment Counsel, noted that while wealthier consumers have anchored recent spending, a decline in stock valuations—particularly those tied to artificial intelligence—could cause overall consumer spending to slow. Higher interest rates would also increase the cost of borrowing for home loans, credit cards, and business expansion.
The Federal Reserve is scheduled to make its next interest rate decision on Wednesday, with many economists expecting a 0.25 percentage point increase. If the Fed continues a series of hikes, it would raise costs for both consumers and the U.S. Treasury, which would need to pay higher yields to investors. Analysts are monitoring whether artificial intelligence companies can generate enough earnings to justify their current valuations, as a failure to do so could impact broader market stability.