Goldman Sachs’ Blankfein advises businesses and consumers to prepare for US recession, says ‘very high risk’
Goldman Sachs senior chairman and former CEO Lloyd Blankfein has warned that businesses and consumers should prepare for a US recession, stressing that it is a “very, very high risk.”
Goldman’s Blankfein Warns of a Recession
Lloyd Blankfein, a former Goldman Sachs CEO who is now the firm’s senior chairman, warned of an impending recession in the United States in an interview with CBS News, which aired on Sunday. He stressed that businesses and consumers should be prepared for it.
Blankfein served as Chairman and CEO of Goldman Sachs Global Investment Bank from 2006 to September 2018. He served as Chairman until December 2018 and is now Senior Chairman of the Goldman Sachs Group.
He was asked, “Do you think we’re headed for a recession?” Blankfein replied:
“We certainly headed. It’s certainly a very, very high risk factor, if you were running a big company, you’d be very prepared for it. If I were a consumer, I would be prepared for it.”
However, the senior chairman of Goldman Sachs explained that a recession “isn’t baked the cake”, noting that there is “a narrow path” to avoid it.
Commenting on the Fed’s response to inflation, he said, “I think they’re responding well.” He added: “I think the Fed has very powerful tools.”
Blankfein was asked if the Fed is doing what it takes to control inflation. He responded: “There is an imbalance, too much demand. And what you have to do is you have to curb that demand.” The former CEO of Goldman responded as follows:
“You have to slow down the economy. And then they will have to raise rates. They will have to reduce, hopefully reduce the number of positions that are not open and increase the size of the workforce.”
“This inflation, some of it is sticky, we have something like 8% inflation. Some of that is transitory and will go away. You know, eventually the war in the Ukraine will end. Some of the supply chain shocks will go away, but some will be a bit stickier and be with us for a while,” he concluded.
Several analysts have predicted that the United States will be in a recession. Deutsche Bank said there will be a major US recession next year. Blankfein’s own investment bank, Goldman Sachs, said the odds of a recession occurring in two years could be 35%. In addition, the Bank of America strategist warned in April that a “recession shock” is coming.
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