“ “I certainly predicted given the economic tightening we’ve seen, you know, a bumpier ride than we’ve had so far.” ”
David Solomon, chief executive officer at Goldman Sachs Group,
GS,
has been “surprised” at the resilience of the U.S. economy over the course of the last year as the Federal Reserve aggressively tightened its monetary policy, according to his interview Monday with CNBC’s “Squawk on the Street” program.
“The U.S. economy has been incredibly resilient,” Solomon said during the interview. “I certainly predicted given the economic tightening we’ve seen, you know, a bumpier ride than we’ve had so far.”
While Goldman’s economists have again reduced the chances they see for a recession, “it’s a period to be a little bit cautious,” according to Solomon. While the U.S. may “muddle through here with a much softer landing than we would have expected,” people running businesses might still consider the economy could face “slow, sluggish growth” with inflation that’s “a little bit more sticky,” he said.
In Solomon’s view, even if the U.S. doesn’t land in a recession, it would “feel like” one in an environment with zero to 1% growth and inflation at 3.5% to 4%. He described himself as “not a good predictor of where interest rates will go” but said “stubborn inflation” means there’s a chance rates could move higher, which probably would make the economic environment “a little bit more challenging.”
Meanwhile, the relatively low unemployment rate may make it “hard to have a recession,” according to Solomon. In May, the U.S. unemployment rate stood at 3.7%, according to the Bureau of Labor Statistics.
“There have been some speed bumps,” said Solomon, but “so far, the economy has been more resilient than we expected.”
The Fed is scheduled to announce its policy decision on interest rates on Wednesday, the day after the inflation report for May is released.
See: Goldman Sachs analysts see more ‘inflation relief’ coming this year, at least ‘beyond the next couple of prints’
Meanwhile, the U.S. stock market was trading higher Monday afternoon, with gains led by the technology-heavy Nasdaq Composite. The Nasdaq
COMP,
was up a sharp 1.3%, while the Dow Jones Industrial Average
DJIA,
rose 0.5% and the S&P 500
SPX,
gained 0.8%, according to FactSet data, at last check.
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