After JPMorgan, Goldman Sachs warns of recession in 2023
Wall Street's biggest banks agree that the dark clouds of recession are on the horizon. David Solomon, the CEO of Goldman Sachs, is the latest entrant into the list of executives who believe recession is just around the corner. He warned that there are chances the US may head into an economic downfall in 2023. His sentiments echoed those of Jamie Dimon, JPMorgan's CEO.
Why does this story matter?
Big banks and their CEOs have started talking about an impending recession. It may or may not happen, but it's not difficult to see a shift in the economic environment. Solomon's words were centered around the US economy, but the same applies to the global economy as well. Considering the hit we took from COVID-19, a recession would be like adding fuel to fire.
Reasonable chance of a recession, but not certain: Solomon
After the company released its third quarter earnings, Solomon said that "there is a reasonable chance of a recession in the US, but it's not certain." He added that the economy might, after all, have a "soft landing." He also asked people running risk-based businesses to be cautious. Notably, Solomon sounded more hopeful about the economy than Dimon did.
Asset appreciation will be tough with inflation, slow growth
Minutes after Goldman Sachs posted its earnings results that exceeded analysts' expectations, Solomon told CNBC that "there's more volatility on the horizon now." Like Dimon, Solomon said that one has to be cautious and be prepared for 2023. He asked investors to be aware of the challenges awaiting. He added that "asset appreciation will be tougher" in an environment with inflation and slow growth.
Large private equity buyouts have fallen considerably
Global dealmaking has gone down due to a fall in large private equity buyouts. Solomon attributed this to an increase in financing costs. He said that investing in society seems to be the way to tackle the economic environment that awaits us in 2023.
