Goldman Sachs CEO believes there is a strong chance of a recession and advises investors to be cautious and prepare for a more difficult environment

The CEO of global investment bank Goldman Sachs, David Solomon, sees a good chance of a recession in the United States. He pointed out that “the environment going into 2023 is one to be cautious and prepared for.

Goldman Sachs CEO warns of a U.S. recession and advises investors to be cautious.

David Solomon, CEO of Goldman Sachs, issued a warning about the direction the U.S. economy is headed in an interview with CNBC on Tuesday. He stated:

I think it’s a time to be cautious, and I think if you’re running a risk-based business, it’s a time to think more carefully about your risk box, your risk appetite.

I think you should expect more volatility on the horizon now“, the Goldman CEO continued. “It doesn’t mean for sure that we have a really tough economic scenario. But on the distribution of outcomes, there is a good chance that we have a recession in the United States.

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However, the executive noted, “The fundamentals don’t really change. The leadership moves to different places, but it’s the same leadership.

Solomon explained that investors must be aware of the challenges ahead, developing :

The environment going into 2023 is one that one must be careful and prepared for.

In an environment of more entrenched inflation and slower growth, asset appreciation will be more difficult” he warned. “Are we going to be rooted in this kind of decade-long scenario? I don’t know.

The Goldman boss detailed that public policies in areas such as energy and immigration will be critical in determining the direction the U.S. economy takes. He concluded:

If you are a risk manager right now, I think you need to prepare for a more challenging environment in 2023.

Goldman Sachs released its third-quarter results on Tuesday. While earnings fell 43% to $3.07 billion, or $8.25 per share, it beat the $7.69 estimate of analysts surveyed by Refinitiv. On the other hand, revenue fell 12% to $11.98 billion.

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Solomon also formally announced a reorganization of the company on Tuesday. The CEO said:

Today we enter the next phase of our growth, introducing a realignment of our business that will allow us to further capitalize on the predominant One Goldman Sachs operating model.

We are confident that our strategic evolution will generate higher, more sustainable returns and unlock long-term shareholder value“, he stated.

Solomon’s counterpart at JPMorgan Chase, Jamie Dimon, recently warned that a recession could hit the U.S. economy in six to nine months. In a recent survey, 98 percent of CEOs said they were preparing for a U.S. recession. President Joe Biden, however, is not worried, saying this weekend that the economy is “strong as hell“.

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