Goldman Sachs CEO said the possibility of a soft landing in the US economy has increased
Goldman Sachs CEO said the possibility of a soft landing in the US economy has increased

Goldman Sachs CEO said the possibility of a soft landing in the US economy has increased

Goldman Sachs Banking 14 February, 2023 9:43 AM

Goldman Sachs CEO David Solomon said Tuesday that the US economy appears more likely to avoid a deep recession this year.

Solomon warned of high uncertainty due in part to inflation and rising tensions between China and the US, business leaders seemed to be more optimistic than last year, he told investors at a Credit Suisse conference in Miami.

“I think it’s going to be, you know, a twisty, turn-y kind of road to navigate through this and get to the other side, but I think the chance of a softer landing feels better now than it felt six to nine months ago,” Solomon said.

Markets have rallied this year as inflation moderated and job growth remains strong, feeding investors’ hope that the economy can stick the elusive soft landing with, at worst, a shallow recession. As a result, capital markets activity has improved from a difficult 2022 that saw a steep drop in IPOs and debt and equity issuance.

“Clearly the market has a sense that we’re putting inflation in the rearview mirror,” Solomon said.

The CEO spoke ahead of Labor Department data showing that the consumer price index rose 0.5 per cent in January, a 6.4 per cent year-over-year increase.

Solomon cited improving sentiment among other executives as grounds for moderate optimism, saying inflation remains a stumbling block to growth and corporate investment. Based in New York, Goldman is one of the world's leading mergers and capital markets advisors.

“The consensus in the CEO community has become more moderate that we can get around this with a softer economic landing in the United States,” he said.

So far, US consumers have been "much more resilient than people expected," he added. In an extensive interview conducted by Credit Suisse analyst Susan Roth Katzke, Solomon said Goldman had a "much tougher hiring plan" this year after laying off about 3,200 employees last month.

Solomon said it is open to acquisitions, particularly in the wealth and wealth management space, but the bar for deals is very high.

CEO will address investors again in February.

On the 28th, the second day for bank investors. The last was in early 2020.