The CEO of global investment bank Goldman Sachs, David Solomon, sees a good chance of a US recession. He emphasized that “the environment towards 2023 is one that you have to be vigilant and prepared for”.
Goldman Sachs CEO warns of US recession, advises investors to be cautious
Goldman Sachs CEO David Solomon warned about the position of the US economy in an interview with CNBC on Tuesday. He say:
I think this is a time to be cautious and I think if you are running a risk based business it is a time to think more carefully about your risk box, your risk appetite.
The Goldman executive continued: “I think you have to expect that there will be more volatility going forward. “That does not mean that we have a really tough economic scenario. But in terms of the distribution of results, we are more likely to have a recession in the United States. “
However, the executive noted: “The fundamentals haven’t really changed. The leadership really moved to different places, but it was the same leadership. “
Solomon explains that investors need to be aware of the challenges ahead, explaining:
The environment heading to 2023 is one where you have to be vigilant and prepare for it.
“In an environment where inflation is rising and growth is slower, it will be more difficult to increase asset prices,” he warned. “Are we rooted in that kind of decades-long perspective? I do not know.”
The Goldman boss detailed that public policy in areas like energy and immigration will be key to determining the position of the US economy. He concluded:
If you are a risk manager right now, I think you have to prepare for a tougher environment in 2023.
Goldman Sachs announced its third-quarter earnings results on Tuesday. While profit fell 43% to $3.07 billion, or $8.25 a share, it exceeded the $7.69 estimate of analysts surveyed by Refinitiv. Additionally, revenue fell 12% to $11.98 billion.
Solomon also officially announced the reorganization of the company on Tuesday. The executive director said:
Today, we enter our next phase of growth, introducing a restructuring of our businesses that will allow us to further leverage One Goldman Sachs’ mainstream operating model.
“We are confident that our strategic evolution will drive higher, more sustainable returns and unlock long-term value for shareholders,” he asserted.
Solomon’s counterpart at JPMorgan Chase, Jamie Dimon, recently warned that a recession could hit the US economy for six to nine months. In a recent survey, 98% of CEOs said they were preparing for a US recession. However, President Joe Biden was not worried when he announced over the weekend that the economy was “strong as hell”.
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