Goldman Sachs CEO worries about a recession


New York
CNN Business

The CEO of one of the biggest US banks fears inflation will remain a problem for some time to come – and he thinks there is a growing risk of a recession.

Goldman Sachs CEO David Solomon said in an interview with CNN’s Poppy Harlow on Wednesday that people should “prepare for an environment…of higher inflation,” adding that “there are strong chances are we haven’t quite peaked yet.”

Moreover, he said, he thinks inflation is “certainly not transitory.”

With that in mind, Solomon said the odds of a recession were higher than normal, especially since the Federal Reserve has already raised interest rates three times this year and is expected to do so again after the Federal Reserve meeting. next Wednesday.

“Any time you have high inflation and you go through an economic squeeze, you end up having some sort of economic downturn,” Solomon said ahead of a Goldman Sachs event for small businesses in Washington, DC. “So I think the chances of us having a recession are high.”

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

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

Bommarito said his company and other small businesses are all struggling with “inflationary pressures, labor pressures [and] a possible recession.

“We manage all the risks on a daily basis. It is certainly a possibility. We think so,” Bommarito said when asked specifically if his company, based in Shelby Township, Michigan — a suburb of Detroit — was bracing for a recession.

Recession worries are a major concern for investors, small businesses and corporate giants in America. Still, Goldman Sachs (GS) 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 had warned on a conference call with analysts that the bank was likely to slow the pace of hiring due to macroeconomic concerns.

Solomon reiterated in Harlow on Wednesday that Goldman Sachs won’t be adding jobs as aggressively in the second half of this year, but noted that hiring “isn’t going to zero.” Still, Solomon remained cautious: “I can’t tell you what the world will look like in six months. If the world seems more difficult, we will adjust accordingly. We always try to be extremely nimble in how we think about these things.

Solomon also offered advice to the Biden administration on how the federal government can help address some of the nation’s most pressing economic issues, saying politicians need to “think about long-term policy that supports investment.” “, especially in the energy industry and other commodity sectors. .

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

“One of the things that comes out of the war in Ukraine is that people are going to think differently about energy, about food, about minerals, about certain health resources. From a supply perspective, we have to be secure in some of these things,” Solomon told Harlow. “That doesn’t mean everything has to be done on land. We are still operating in a global economy, but there are things we need to make sure we have the right access and security for. And we don’t necessarily have to rely on others.

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

“One of the things that I think would be great is temporary work visas. We need more people in the United States. We have huge job opportunities,” said he said, noting that this would be particularly beneficial for small businesses. Yet he added that “none of this can happen until we secure the border and there is no policy clear border”.

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

“Our footprint 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 stressed to current employees that the company will do all it can to support existing workers seeking abortions who now live in a state where this is or could be. soon to be illegal.

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

“So we’ve thought about our medical support for our employees and we’ve made some changes,” Solomon said, adding that Goldman Sachs will help “anyone who needs medical service of any kind, no matter where in the country” if unable to get to their home country.

Leave a Comment