Goldman Sachs CEO Warns of Rising U.S. Recession Risk Amid Trade Uncertainty

Goldman Sachs CEO David Solomon has warned that the likelihood of a U.S. economic recession is increasing amid heightened uncertainty in trade policies and confusion among many CEOs about how to plan for the future. He noted that while the government's recent more gradual negotiation stance is commendable, market volatility will persist until specific policies are implemented.

Solomon made these remarks during Goldman Sachs' first-quarter earnings call, highlighting that the operating environment has significantly changed since the beginning of the year. He pointed out that the new round of tariff policies presents numerous unknown factors for businesses. Solomon emphasized that the uncertainty in the future path poses a major risk to both the U.S. and global economies. Even before the tariff escalation, global economic growth had already slowed, and the new policies have almost "reset" global expectations for future growth. He noted that Goldman Sachs' corporate and investment clients are universally concerned that short-term and long-term uncertainties are limiting their ability to make key decisions.

Solomon acknowledged that the government's recent more gradual negotiation stance is commendable, as it provides space for negotiations with multiple countries. However, he cautioned that market volatility will continue until specific policies are implemented. Solomon's comments come as Goldman Sachs reported mixed first-quarter earnings. The firm's overall revenue and profits were boosted by market volatility, while investment banking fees declined. Goldman Sachs' net income for the first quarter increased by 15% year-over-year to $4.74 billion, and revenue grew by 6% to $15 billion. The trading division performed strongly, with equity trading revenue increasing by 27% and overall trading revenue reaching $8.59 billion, the best quarterly performance since 2009. However, the investment banking business faced challenges, with banking fees revenue decreasing by 8% year-over-year and advisory revenue for mergers and acquisitions falling by 22%, below analyst expectations.

Solomon is not the only executive expressing concerns. Last week, CEOs from other major Wall Street firms, including JPMorgan Chase, BlackRock, and Morgan Stanley, also voiced their worries about the economic outlook. JPMorgan Chase CEO Jamie Dimon stated that the current economy is facing significant turbulence due to geopolitical tensions and trade disputes, making clients more cautious. BlackRock CEO Larry Fink described the escalation of new tariff measures as "far beyond anything I've seen in my 49-year career in finance," noting that uncertainty and anxiety about the market and economy's future have dominated conversations with clients. Morgan Stanley CEO Ted Pick stated that the market is still in a state of pause, with the trading cycle extending, and uncertainty surrounding inflation and potential economic contraction.