Goldman Sachs CEO downplays U.S. recession risk

David Solomon, the chief executive of Goldman Sachs, took a relatively upbeat view of the U.S. economy and said there was a “small but not zero” chance of a recession in 2025. 

Solomon, who was speaking at the Australian Financial Review Business Summit in Sydney on Tuesday, mentioned risks to global trade policies and how those risks could affect economic growth.

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President Donald Trump imposed a 25% tariff on imports from Canada and Mexico effective immediately, the White House announced Monday. Tariffs on Chinese imports will rise from 10% to 20% after China failed to stop the shipment of fentanyl into the U.S.

These moves have also fueled fresh volatility in equity and bond markets as investors assess their possible impact on global trade and growth.

Solomon recognized the economic risks associated with those policies, but he emphasized that they don’t necessarily indicate a looming economic recession. 

David Solomon said at the Australian Financial Review Business Summit in Sydney that there are trade imbalances and that the president is aggressively taking action to level the playing field. He added that Trump is executing this view.

Business leaders express cautious optimism

Solomon has also tried to remain cautiously optimistic despite some market analysts’ warnings about potential economic headwinds. He noted that business executives are acutely attuned to the impact of trade policies and the state of credit markets.

He also noted that the economy has been without a conventional credit cycle for more than a decade, resulting in an accumulation of excess. While it may not be an immediate threat, he noted that people need to look ahead and recognize the increasingly interconnected nature of financial systems.

Stephen Schwarzman, CEO of Blackstone Inc., spoke at the same conference. Schwarzman cited a quarterly survey by Blackstone of the 250 companies it owns, none of whose executives expect a recession this year. “The U.S. economy remains in good shape,” he declared.

Despite Solomon’s optimism, some economists have been warning about stagflation — a scenario when high inflation continues while growth slows. In a report, Business Insider wrote that prolonged inflationary pressure and higher interest rates are expected to inhibit economic momentum, especially if spending among consumers weakens.

Jamie Dimon, JPMorgan Chase’s chief executive, also recently took a more sober view of the economy. He added that there are still geopolitical risks, inflationary pressures, and the potential for all kinds of disruptions from global trade conflicts.

Although the U.S. economy is holding steady, the long-term effects of Trump’s hardline trade policies are unknown. Market analysts will converge on how businesses have adjusted to the changing trade landscape. Solomon said that investors should stay alert and mindful of changing credit cycles and market dynamics. “The trick is understanding how all the pieces talk to each other,” he added.

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