Goldman Sachs CEO David Solomon warned Tuesday that the U.S. economic system is likely to be headed for a downturn that might make investing and enterprise choices tougher.
“I feel it is a time to be cautious, and I feel that for those who’re operating a risk-based enterprise, it is a time to suppose extra cautiously about your danger field, your danger urge for food,” Solomon mentioned throughout a reside interview on CNBC’s “Squawk Field.”
“I feel it’s important to anticipate that there is extra volatility on the horizon now. That does not imply for positive that we now have a extremely tough financial situation. However on the distribution of outcomes, there is a good probability that we now have a recession in the USA,” he added.
Solomon spoke simply minutes after Goldman launched third-quarter earnings outcomes that topped analyst expectations for each revenue and income. That comes at an necessary time for the corporate because it prepares one other reorganization, this time combining the Wall Avenue large’s 4 primary companies into three.
Reorganizing the corporate and streamlining the companies displays “the evolution of this one-Goldman Sachs ethos” that he mentioned will assist the financial institution serve purchasers higher.
“The basics actually do not change,” Solomon mentioned. “The management does transfer to totally different locations, however it’s the identical management.”
Talking on macro points, Solomon repeatedly careworn the significance of warning, noting the tightening of monetary situations and rise of inflation in latest months.
The Federal Reserve has been elevating rates of interest aggressively since March in an effort to calm inflation operating at its highest ranges in additional than 40 years. Markets have reacted strongly, with shares tumbling and Treasury yields surging.
“That atmosphere heading into 2023 is one which you have to be cautious and ready for,” Solomon mentioned.
His remarks got here just some days after his counterpart at JPMorgan Chase, Jamie Dimon, additionally warned of looming bother for the U.S. economic system, saying increased inflation and rates of interest and the warfare in Ukraine threaten an economic system that in any other case is doing properly now.
Like Dimon, Solomon mentioned buyers must be acutely aware of the challenges forward.
“In an atmosphere the place inflation is extra embedded and development is slower, you already know, asset appreciation might be harder,” he mentioned. “Are we going to get rooted in that type of a decadelong situation? I do not know.”
He mentioned public coverage in areas together with vitality and immigration might be necessary in figuring out how properly the U.S. is ready to navigate via its challenges.
“Can we discover methods to do issues that permit us to spend money on our society in a manner that makes it simpler to shift this? I haven’t got the solutions to that, however I am actually going to give attention to it,” Solomon mentioned. “For those who’re a danger supervisor proper now, I feel it’s important to put together for a tougher atmosphere in 2023.”