Goldman Sachs Group Inc. GS chairman David Solomon is the latest high-profile executive to offer a bleak economic forecast.
Most experts agree that the Federal Reserve’s fight against inflation – rising prices as a result of geopolitical events like the war in Ukraine – and other challenges are likely to drive the US forward into a recession.
“I think it’s time to be cautious, and I think if you’re running a risk-based business, it’s time to think more cautiously about your risk box and your risk appetite,” Solomon told CNBC. There is a good chance the US will experience a recession and it is not certain how difficult the economic scenario will be, he explained.
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Goldman’s third-quarter earnings results, which beat analyst estimates on both earnings and sales, came just minutes before Solomon’s comments.
The company’s earnings announcement comes at a crucial time for the investment bank as it prepares for another restructuring that will combine its four main businesses into three.
The payment
- EPS: $8.25 per share est. vs. $7.69 per share
- Revenue: $11.98 billion versus $11.41 billion estimate
- The company’s reorganization and streamlining of operations reflect “the development of that one Goldman Sachs ethos,” which Solomon said will help the bank better serve customers.
- “The fundamentals really don’t change,” he said. “Leadership moves to different places, but it’s the same leadership.”
- Goldman shares rose 4.4% for the day on Tuesday.
- Solomon also stressed the need for caution while discussing macroeconomic concerns, noting the recent tightening in financial conditions and the rise in inflation.
Solomon’s comments come just days later Jamie DimonCEO of JPMorgan Chase JPM, warned of the impending turmoil in the US economy, stating that rising inflation, interest rates and the conflict in Ukraine are threatening an otherwise healthy economy.
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