Two of the most expensive things a shell does are call fork and call execve for an external program. pwd is a builtin (at least for bash) but the former still applies. $PWD exists even if you don’t want that shortening; just like your backticks be sure to quote it once so it doesn’t get expanded when assigning to PS1.

In general, for most things you might want to do, you can arrange for variables to be set ahead of time and simply expanded at use time, rather than recalculating them every time. For example, you can hook cd/pushd/popd to get an actually-fast git prompt. Rather than var=$(some_function) you should have some_function output directly to a variable (possibly hard-coded - REPLY is semi-common; you can move the value later); printf -v is often useful. Indirection should almost always be avoided (unless you do the indirect-unset bash-specific hack or don’t have any locals) due to shadowing problems (you have to hard-code variable name assumptions anyway so you might as well be explicit).