The United States, very high risk, Goldman Sachs, Senior Chairman, Lloyd Blankfein, businesses and consumers, CBS
The United States faces a "very, very high risk" of recession: Chairman of Goldman Sachs

Goldman Sachs Senior Chairman Lloyd Blankfein has urged businesses and consumers to brace themselves for a US recession, calling it a “very, very high risk.” “If I were running a large corporation, I would be very prepared,” Blankfein said on CBS’ “Face the Nation” on Sunday. “If I were a consumer, I’d be prepared.” A recession is “not baked in the cake,” he says, and there is a “narrow path” to avoid it. The Federal Reserve has “very powerful tools” to combat inflation and has been “responding well,” according to the former Goldman CEO.

READ:   Zhu Yi, a Chinese figure skater born in the United States, has come under fire after collapsing during her Olympic debut

With high gasoline prices and a shortage of baby formula as tangible indicators of Americans’ unease, US consumer sentiment fell to its lowest level since 2011. Consumer prices in the United States rose 8.3 percent year on year in April, slowing slightly from March but remaining among the fastest rates in decades.

Blankfein’s remarks were made on the same day that the firm’s economists cut their U.S. growth projections for this year and next to reflect the recent market volatility.

Goldman’s economic team, led by Jan Hatzius, now forecasts 2.4 percent growth in the United States this year, down from 2.6 percent previously. It lowered its 2023 forecast to 1.6 percent from 2.2 percent.
According to the report, this is a “necessary growth slowdown” to help temper wage growth and bring inflation back down to the Fed’s target of 2%. While the slowdown will increase unemployment, Goldman believes a sharp increase in joblessness can be avoided.

READ:   "The United States is bracing for North Korea's nuclear test," says Biden in a message to Kim

While some of the inflation “will go away” as supply chains unclog and Covid-19 lockdowns in China ease, “some of these things are a little bit stickier, like energy prices,” according to Blankfein.
Americans have long benefited from globalisation, which has reduced the cost of goods and services due to cheaper labour overseas, he claims.

“How comfortable are we now relying on supply chains that are not within US borders and that we cannot control?” Blankfein explained. “Do we feel good about getting all of our semiconductors from Taiwan, which is, once again, a Chinese object?”

READ:   The United States women's hockey team has qualified for the Olympic quarterfinals in Beijing