Goldman Sachs’s Waldron: Inflation Is Economy’s Biggest Risk as PCE Hits Three-Year High

Goldman Sachs (GS) Chief Operating Officer John Waldron said on May 28, 2026, that inflation is the biggest risk factor for the U.S. economy, warning that persistently rising long-term interest rates will raise funding costs and alter consumer behavior. His comments came the same day the April personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, climbed to its highest level in three years. Bond market signals earlier in May had reignited concerns that current rates remain insufficient to cool price pressures. CME FedWatch data shows traders now see a 50.5% probability of another rate increase this year, slightly ahead of a 49% chance of no change. Apollo economist Torsten Slok noted that a surge in artificial-intelligence-driven infrastructure spending is less sensitive to higher rates than traditional consumer loans, potentially sustaining inflation even if the Fed tightens further. Waldron acknowledged the anxiety but said there are no clear warning signs of a consumer pullback, noting the labor market remains resilient. He added that AI and other activities are driving financing demand to record highs.