According to Goldman Sachs CEO David Solomon, there are increased chances that the U.S. economy will avoid a deep recession this year. Even though Solomon cautioned that uncertainty is high, particularly because of inflation and growing tensions between the United States and China, business leaders appear to be more optimistic than last year, he told investors at a Credit Suisse conference in Miami. “I think it’s going to be, you know, a twisty, turn-y kind of road to navigate through this and get to the other side, but I think the chance of a softer landing feels better now than it felt six to nine months ago,” Solomon said. Markets have rallied this year as inflation has moderated and job growth has been strong, stirring investors’ hopes that the economy will stick the soft landing with, at worst, a shallow recession. As a result, capital markets activity has improved from a difficult 2022 that saw a steep drop in initial public offerings and debt and equity issuance. “Clearly the market has a sense that we’re putting inflation in the rearview mirror,” Solomon said. The CEO spoke before the release of Labor Department data showing that the consumer price index rose 0.5% in January, which translated to an annual gain of 6.4%.
Although Solomon said inflation was still a deterrent to growth and corporate investment, he cited improving sentiment among other CEOs as the basis of his measured optimism. New York-based Goldman is one of the world’s top advisors when it comes to mergers and tapping capital markets. “Consensus has shifted to be a little bit more dovish in the CEO community, that we can navigate through this in the United States with a softer economic landing,” he said. The American consumer has been “much more resilient than people expected” so far, he added. During an extensive interview with Credit Suisse analyst Susan Roth Katzke, Solomon said Goldman has a “much more narrow hiring plan” this year after laying off 3,200 workers last month. While Solomon said he’s open to making acquisitions, especially in the asset and wealth management sector, he noted that the bar to making a deal is very high. The CEO is scheduled to address investors again on Feb. 28 at the bank’s second-ever investor day. The last one was in early 2020.