Goldman CEO Draws Line on Recession: "1-2 Rate Cuts in Autumn"

"The U.S. economy will continue to improve, and there will probably be no recession."

David Solomon, CEO of Goldman Sachs, recently dismissed concerns about a U.S. recession. He said there would be no "emergency rate cuts" as some in the market have suggested, but predicted one or two rate cuts could happen this fall.

David Solomon, CEO of Goldman Sachs, appeared on June 6 (local time) on Bloomberg TV's popular economic show, The David Rubenstein Show, stating, "There will be no recession in the U.S.," and ruled out the possibility of an early interest rate cut. / Screenshot from Bloomberg TV

Bloomberg News reported this on the 6th (local time), citing excerpts from an interview with Solomon on the David Rubenstein Show produced by Bloomberg. Solomon said, "We won't see anything before September," and diagnosed that "there will be no recession."

Recently, both inside and outside Wall Street, concerns about a recession have grown following the release of the July nonfarm payroll report last week, leading to a global stock market crash. This sparked speculation that the Federal Reserve (Fed) might make an emergency rate cut before the September Federal Open Market Committee (FOMC) meeting or execute a so-called "big cut" at the September meeting.

Regarding this, Solomon drew a line on the possibility of emergency rate cuts, saying, "Based on current indicators and the Fed's messaging, I think there is a high possibility of one or two cuts in the fall." He pointed out that the recent market shock was due to the unwinding of yen carry trades following the Bank of Japan (BOJ)'s decision to raise interest rates.

Regarding the July nonfarm payroll report, which dealt a direct blow that spread recession fears, he evaluated it as "not a terrible employment report, just weaker than people expected." He also mentioned that many investors are placing their hopes on a soft landing for the U.S. economy.

However, Solomon predicted that the recent shock might feel prolonged and that short-term volatility would increase. He said, "I think the market is undergoing a correction after a very strong rally. This can be healthy," adding, "We will see greater short-term volatility. It will be a fairly large and meaningful correction."

Earlier, Solomon had assessed that the market was overly optimistic about the pace of rate cuts. In May, he also mentioned that the Fed might not cut rates within the year but has since softened this hawkish stance. The full interview with Solomon is scheduled to be released on June 14 on Bloomberg TV's David Rubenstein Show.