Goldman Sachs CEO on probability of economic soft landing
David Solomon also said U.S. consumers were being 'much more resilient' than people had anticipated
Goldman Sachs' Joe Duran addresses layoffs affecting 3,200 employees
Goldman Sachs head of personal finance management Joe Duran provides his 2023 market outlook and discusses the firm's 'tough decision' to cut 3,200 jobs on 'Varney & Co.
David Solomon on Tuesday discussed the probability of the U.S. economy experiencing a soft landing.
"What I’d say is, while it’s still very, very uncertain, the consensus has shifted to be a little bit more dovish in the CEO community that we can navigate through this in the United States with a softer economic landing than what people would have expected six months ago," the Goldman Sachs CEO said at the Credit Suisse Financial Services Forum.
David Solomon, Chair and CEO of Goldman Sachs, speaks at the 2022 Milken Institute Global Conference, in Beverly Hills, Calif., May 2, 2022. (Reuters/Mike Blake/File Photo / Reuters Photos)
Solomon prefaced the comment by saying he was "not an economic forecaster" and "keenly aware of the fact I’m not good at making predictions." He also noted he was "very fortunate to sit in a seat or a position where I have lots of input coming from lots of people around what’s going on in their businesses."
JP MORGAN'S JAMIE DIMON MORE OPTIMISTIC ON US CONSUMER
The U.S. consumer, he also said at the event, has been "much more resilient than people expected."
"I think there have been behavior patterns based on the way people live and work that have affected people’s disposable income and have shifted the way they do certain things, and there’s been a long run out on that," Solomon told the host.
INFLATION ROSE 6.4% IN JANUARY
He said he believes it is "still uncertain exactly what the trajectory will be of tamping down inflation," which he described as being "still sticky."
When Solomon participated in the "fireside chat" at the Credit Suisse conference, the latest Consumer Price Index data had not yet been put out by the Bureau of Labor Statistics, something he and the host noted. In January, inflation climbed 0.5% month-over-month and 6.4% year-over-year, according to the CPI data published later in the morning.
David Solomon, chief executive officer of Goldman Sachs Group Inc., during a Bloomberg Television at the Goldman Sachs Financial Services Conference in New York, US, on Tuesday, Dec. 6, 2022. Solomon sees "bumpy times ahead" for the global economy, m (Michael Nagle/Bloomberg via Getty Images / Getty Images)
In a bid to wrestle inflation closer to its target 2%, the Federal Reserve has implemented multiple interest rate hikes, including a quarter-point one at the beginning of February. Those efforts by the central bank have prompted concerns to arise about whether the U.S. economy will potentially fall into a recession or have a soft landing.
FED OFFICIALS SIGNAL INTEREST RATES MAY NEED TO GO HIGHER THAN EXPECTED
"I agree with the consensus that it’s a softer scenario, but there are still tails both to the positive and the negative that could be harder," Solomon said. "I think we’re in an environment where we’re probably going to have more sluggish, slower growth for a period of time until we get a lot of this to rebalance."
The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. (REUTERS/Andrew Kelly/File Photo / Reuters Photos)
He noted that while "clearly the market has a sense that we’re putting inflation in the rearview mirror," he was "less certain."
"I think it’s gonna be, you know, a twisty, turny kind of road to navigate through this and get to the other side," the Goldman Sachs CEO said. "But I think the chance of a softer landing feels better now than it did six to nine months ago."