Goldman Sachs CEO David Solomon on soft landing odds for U.S. economy

Goldman Sachs CEO David Solomon said Tuesday that the odds the U.S. economy can avoid a deep recession this year seem to have improved.

While Solomon cautioned that uncertainty is high, in particular because of inflation and growing tensions between China and the U.S., business leaders seemed 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 moderated and job growth remains strong, feeding investors’ hope that the economy can stick the elusive 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 IPOs 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 the wide-ranging interview conducted by Credit Suisse analyst Susan Roth Katzke, Solomon said that Goldman has a “much tighter hiring plan” this year after laying off about 3,200 workers last month.

While Solomon said he’s open to making acquisitions, especially in the asset and wealth management sector, the bar is very high to making a deal.

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.