Goldman Sachs CEO Worried About US Recession

The CEO of one of the biggest banks in the United States is worried that inflation could remain problematic for some time to come — and he believes there is an increasing chance of recession.

Goldman Sachs CEO David Solomon said in an interview with Poppy Harlow of CNN on Wednesday (20) that people need to “prepare for an environment of higher inflation”, adding that “there is a good chance that we have not yet reached the peak”.

Furthermore, he said, he believes that inflation is “definitely not transitory.”

With that in mind, Solomon said the chances of a recession are higher than usual — especially as the Federal Reserve has already raised interest rates three times this year and is expected to do so again after next Wednesday’s meeting.

“Whenever you have high inflation and you experience an economic downturn, you end up having some kind of economic downturn,” Solomon said ahead of a Goldman Sachs small business event in Washington, DC. “So I think the chances of having a recession are high.”

Worries about an economic downturn are on the minds of small business owners across the country.

“We are the backbone of the economy. It all starts with the small business,” Jill Bommarito, owner of Ethel’s Baking Company, told Harlow ahead of the Goldman Sachs event in Nationals Park, home of the Washington baseball team.

Bommarito said his company and other small businesses are facing “inflationary pressures, pressures from the workforce [e] a possible recession”.
“We are all managing risk every day. It’s definitely a possibility. We feel it,” Bommarito said when asked specifically whether her company, based in Shelby Township, Michigan — a suburb of Detroit — is bracing for a recession.

Goldman Sachs worries about energy independence and immigration policy

Recession concerns are a strong one among investors, small businesses and America’s corporate giants. Still, Goldman Sachs reported better-than-expected earnings earlier this week despite a slowdown in trading and a brutal first half for the stock market.

But Goldman Sachs chief financial officer Denis Coleman warned during a conference call with analysts that the bank is likely to slow its hiring pace due to macroeconomic concerns.

Solomon reiterated to Harlow on Wednesday that Goldman Sachs will not be adding jobs as aggressively in the second half of this year, but noted that hiring “doesn’t go to zero.”

Still, Solomon remained cautious: “I can’t say what the world will be like in six months. If the world seems more difficult, we will adjust accordingly. We always try to be extremely agile in how we think about these things.”

Solomon also shared advice for the Biden administration on how the federal government can help solve some of the country’s most pressing economic problems, saying politicians need to “think about long-term policies that support investment,” particularly in the energy sector and other commodity sectors.

“I think we need an energy policy that encourages more energy security here and investment in our energy resources,” Solomon said, adding that the US needs to be energy independent and create incentives so that the country can become “greener” in the long run. deadline.

“One of the things that comes out of the war in Ukraine is that people will think differently about energy, food, minerals, certain health resources.” Solomon told Harlow.

“This does not mean that everything should be done locally. We still operate in a global economy, but there are things where we need to make sure we have the right access and security. And it doesn’t necessarily have to depend on others.”

Solomon also said the Biden administration should get rid of more — but not necessarily all — of the Trump-era tariffs on China. And he said he supports changes to immigration policy to help spur economic growth.

“One of the things I think would be great is temporary work visas. We need more labor in the United States. We have great job openings,” he said, noting that this would be particularly beneficial for small businesses. Still, he added that “none of this can happen until we secure the border and have a clear border policy.”

But Solomon didn’t seem to think that the Supreme Court’s recent decision to overturn Roe v. Wade, the landmark case that legalized abortion across the country, will affect Goldman Sachs’ chances of recruiting new workers in states like Texas, where abortion could soon be banned.

“Our presence is all over the United States,” Solomon told Harlow, adding that “many, many people” have applied for jobs at Goldman Sachs in Texas.

That said, Goldman Sachs – like many other major US companies – has emphasized to current employees that the company will do what it can to support existing workers seeking an abortion who are now living in a state where it is or may soon be illegal.

“My first priority after the Supreme Court decision is to always think about our employees, their safety, their well-being,” he said.

“So we thought about our medical support for our employees and made changes,” Solomon said, adding that Goldman Sachs will help “anyone who needs any medical service of any kind, anywhere in the country” if they can’t get it in your home state.