Goldman Sachs CEO David Solomon on weak touchdown prospects for US economic system

David Solomon, Chairman & CEO of Goldman Sachs, speaks about Squawk Box at the WEF in Davos, Switzerland on January 23, 2023.

Adam Galika | CNBC

Goldman Sachs CEO David Solomon said Tuesday the US economy’s chances of avoiding a deep recession this year appear to have improved.

While Solomon warned that uncertainty is high, particularly over inflation and rising China-US tensions, business leaders appeared more optimistic than last year, he told investors at a Credit Suisse conference in Miami.

“I think it’s going to be a twisty, winding road to navigate through here and get to the other side, but I think the chance for a softer landing feels better now than it did six to nine months ago,” he said Solomon.

Markets have rallied this year as inflation has eased and job growth remains strong, fueling investors’ hopes that the economy can weather the elusive soft landing with a worst-case scenario of a shallow recession. As a result, activity in capital markets has improved from a difficult 2022, which saw IPOs, debt and equity issuance fall sharply.

“Clearly the market feels we’re putting inflation in the rear-view mirror,” Solomon said.

The CEO was speaking ahead of the release of Labor Department data showing the consumer price index rose 0.5% in January, up 6.4% for the year.

Though Solomon said inflation is still a drag on growth and business investment, he cited improving sentiment among other CEOs as the basis for his measured optimism. New York-based Goldman is one of the world’s leading mergers and capital markets advisors.

“The consensus has shifted in the CEO community that we in the United States can navigate this situation with a smoother economic landing,” he said.

The American consumer has so far been “much more resilient than expected,” he added.

During the wide-ranging interview conducted by Swiss credit Analyst Susan Roth Katzke, Solomon, said Goldman has a “much tighter hiring plan” this year after laying off about 3,200 employees last month.

While Solomon said he’s open to acquisitions, particularly in the wealth management sector, the bar for a deal is set very high.

The CEO is expected to address investors again at the bank’s second Investor Day on February 28. The last was in early 2020.

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