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

Goldman Sachs Group Inc. (NYSE: 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 (NYSE: 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 (NYSE: 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.