According to Goldman Sachs CEO David Solomon, the U.S. economy may be heading for a downturn that could make investment and business decisions more difficult. “I think it’s a time to be cautious, and I think that if you’re running a risk-based business, it’s a time to think more cautiously about your risk box, your risk appetite,” Solomon said during a live interview on CNBC’s “Squawk Box.” “I think you have to expect that there’s more volatility on the horizon now. That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States,” he added.
Solomon spoke shortly after Goldman’s third-quarter earnings exceeded analyst expectations in terms of profit and revenue. That announcement is critical for the company as it prepares for another reorganization, combining the Wall Street giant’s four main businesses into three. Reorganizing the company and streamlining the businesses reflects “the evolution of this one-Goldman Sachs ethos” that he said will help the bank serve clients better. “The fundamentals really don’t change,” Solomon said. “The leadership does move to different places, but it’s the same leadership.” Speaking on macro issues, Solomon repeatedly stressed the importance of caution, noting the tightening of financial conditions and the rise of inflation in recent months. The Federal Reserve has been raising interest rates aggressively since March to keep inflation running at its highest levels in more than 40 years. Markets have reacted strongly, with stocks tumbling and Treasury yields surging. “That environment heading into 2023 is one that you’ve got to be cautious and prepared for,” Solomon said.