Goldman Sachs CEO Worried About A Recession

New York
CNN Business

The CEO of one of America’s biggest banks worries inflation will remain an issue for some time – and he thinks the risk of a recession is growing.

Goldman Sachs CEO David Solomon said in an interview with CNN’s Poppy Harlow on Wednesday that people need to “prepare for an environment…higher inflation,” adding that “there’s a lot of possibility.” We have not reached the peak yet.”

What’s more, he said, he believes inflation is “certainly not temporary.”

With that in mind, Solomon said the possibility of a recession larger than usual – especially since the Federal Reserve has raised interest rates three times this year and is expected to raise rates again after next Wednesday’s meeting.

“Whenever you have high inflation and economic tightening, you get some kind of recession,” Solomon said before a Goldman Sachs event for small businesses in Washington, DC. “So I think the chances of us having a recession are very high.”

Fears of a recession are clear in the minds of small business owners across the country.

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

Bommarito says her company and other small businesses are all struggling with “inflationary pressures, workforce pressures [and] A recession is possible. ”

“We are all managing risk every day. That is definitely a possibility. We feel that,” said Bommarito when asked specifically about whether her company, which is based in Shelby Township, Michigan — a suburb of Detroit — is preparing for a recession. .

Recession worries are a major concern for American investors, small businesses, and giant corporations. However, Goldman Sachs

reported better-than-expected earnings earlier this week, despite a slowdown in deal execution and a bad first half for the stock market.

However, Goldman Sachs chief financial officer Denis Coleman warned in a conference call with analysts that the bank will likely slow its hiring pace due to macro concerns.

Solomon reiterated to Harlow on Wednesday that Goldman Sachs will not add more jobs in the second half of the year but he noted that hiring “won’t go to zero”. Still, Solomon is cautious: “I can’t tell you what the world will be like in six months. If the world seems tougher, we’ll adjust accordingly. We always try to be super nimble in the way we think about these things.”

Solomon also shared advice for the Biden administration on how the federal government can help solve some of the nation’s more pressing economic problems, saying politicians need to “think about long-term policy that supports investment support”, especially in the energy 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 generate electricity. provide incentives for the country to become “greener” in the long-term.

“One of the things that came out of the war in Ukraine was that people would think differently about energy, about food, about minerals, about certain healthcare resources. From a supplies perspective, we have to secure some of these things,” Solomon told Harlow. “That doesn’t mean everything has to be brought ashore. We still operate in the global economy, but there are things where we have to make sure we have the right access and the right security. And we don’t necessarily have to rely on others.”

Solomon also said that the Biden administration should remove more – but not necessarily all – of Trump-era tariffs on China. And he said he supported changes to immigration policy to help spur economic growth.

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

But Solomon doesn’t seem to think that the Supreme Court’s recent decision on overturned Roe v. WadeA landmark case that legalized abortion nationwide would affect Goldman Sachs’ chances of hiring new workers in states like Texas where abortion could soon be banned.

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

That said, Goldman Sachs – like many other large US companies – has stressed to current employees that the company will do what it can. support current workers who are seeking abortion people who currently live in a state where it was or may soon be illegal.

“My top priority following the Supreme Court decision is to always think of our employees, their safety and their health,” he said.

“So we were thinking about medical support for our employees and we made the changes,” Solomon said, adding that Goldman Sachs will help “anyone who needs any of these services.” medical care, anywhere in the country” if they cannot get it in their home state.

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