Goldman Sachs Boss Predicts Recession, Warns Risk-Based Businesses: 'Time To Be Cautious'

Goldman Sachs Group Inc. GS CEO David Solomon is the latest high-profile executive to issue a dour economic forecast.

Most experts agree that the Federal Reserve's battle against inflation — rising prices as a result of geopolitical events such as the war in Ukraine — and other challenges will likely push the U.S. into a recession.

“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 told CNBC. There’s a good chance that the U.S. will have a recession and it’s not certain how difficult the economic scenario will be, he explained.

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Goldman's third-quarter earnings figures, which came in above analyst estimates for both earnings and revenue, were announced just minutes before Solomon's comments.

The firm's earnings announcement comes at a crucial time for the investment bank, which is getting ready for another restructuring that would see its four primary operations condense into three.

The Numbers

• EPS: $8.25 per share vs. $7.69 per share estimate
• Revenue: $11.98 billion vs. $11.41 billion estimate
• Reorganizing the company and streamlining the businesses reflects “the evolution of this one-Goldman Sachs ethos” that Solomon said will help the bank serve clients better.
• “The fundamentals really don’t change,” he said. “The leadership does move to different places, but it’s the same leadership.”
• Goldman shares rose 4.4% intraday Tuesday.
• Solomon also emphasized the need for prudence while discussing macro concerns, pointing out the recent tightening of financial conditions and increase in inflation.

Solomon's comments come just a few days after Jamie Dimon, CEO of JPMorgan Chase JPM, warned of impending turmoil for the American economy, stating that increased inflation, interest rates, and the conflict in Ukraine imperil an otherwise healthy economy.

See Also: Global CEOs Expect Recession, But A 'Mild And Short' One

The CEO of Bank of America Corp BAC, Brian Moynihan, was the most optimistic among the bank executives, asserting on the bank's earnings call on Monday that the market has already effectively baked a recession into the economy and arguing that U.S. consumers will be resilient because spending data is still strong despite record high inflation.