ICG sees Iran war-driven energy costs slowing US growth in 2027
SPY•ICG expects the Iran war’s impact on energy prices to outweigh the lasting economic effects of the 2026 US midterm elections. It says elevated energy costs could keep interest rates higher for longer and weaken US growth and earnings in 2027.
1. Growth and bond risks
ICG estimates US growth excluding AI investment is trending around 1.5%, similar to Europe, while earnings remain resilient. It says rising government interest payments, now around 20% of revenues, and little appetite for deficit reduction increase the risk of US bond market turmoil; strong private-sector balance sheets keep systemic risks low, but weaker borrowers face increasing pressure from higher rates and energy costs.
