Goldman Sachs CEO David Solomon expressed doubts that the prospects for further dynamics of the United States economy are positive.
At the same time, the head of one of the largest investment financial institutions noted that the American economic system has the potential of a so-called soft landing. According to him, the probability of realizing the mentioned potential has increased significantly over the past year. David Solomon also said that inflation in the United States may be more prolonged than initially expected.
The head of the financial institution noted the efforts of the Federal Reserve System aimed at curbing the intensity and scale of inflationary processes and existing in the form of systematic implementation of the policy of raising interest rates but stressed that additional measures may be required to counteract this negative trend. David Solomon does not share the optimism of some market participants who are confident that inflation in the United States will not be long-term. The CEO of Goldman Sachs is convinced that the fight against the steady rise in prices and the depreciation of money will still require many different efforts.
Currently, the trajectory of the forward curve of US Treasury bonds indicates a decline in interest rates in the future. David Solomon believes that this may not happen, and the scenario of economic dynamics may turn out to be optimism, inconsistent with reality. According to him, there is currently uncertainty in the American economic system. He also stated that it is necessary to recognize the unpredictability of the mentioned system, which continues to persist.
At the same time, David Solomon, despite the lack of optimism in his opinion based on the confidence that inflation will not last, believes that the United States economy is strong enough to avoid a recession. This forecast, which contains faith in the prospects of the American economic system, became a catalyst for the resumption of capital markets, thanks to which significant initial public offerings of shares were carried out. David Solomon stated that Goldman Sachs has participated in many of these IPOs with good results.
At the same time, the head of the bank noted that mergers and acquisitions may resume more slowly due to the continuing uncertainty. According to him, companies are currently assessing the prospects for improving external circumstances and using the methodology of strategic thinking when planning decisions, but it should take some time before the concept formed at the level of thought becomes a concrete action.
David Solomon has criticized the proposal of the US authorities to raise capital requirements for large banks. He adheres to the same position as the heads of other American financial institutions, according to which stricter regulations may lead to restrictions on the availability of financing for businesses and will most likely become an obstacle to economic growth. David Solomon says that if the new rules are implemented, some activities will be forced out of the banking sector.
Jamie Dimon, Chairman of the Management Board and Chief Executive Officer of JPMorgan Chase&Co, also disagrees with the proposed money management standards for approval as mandatory requirements. During a speech at a conference in New York this week, he expressed concern that the new rules would become a barrier to economic development. The head of the bank called for greater transparency in decision-making by regulators, noting the importance of fairness and openness in the environment of legal control.