Lloyd Blankfein, senior chairman and former CEO of Goldman Sachs, warned that companies and consumers should prepare for a U.S. recession. He stressed that it was “very, very, high risk”.

Goldman’s Blankfein warns of recession

Lloyd Blankfein, the former Goldman Sachs chief executive and now the senior chairman of Goldman Sachs, warned in an interview with CBS News that aired Sunday that the U.S. is on the verge of a recession. He stressed that businesses and consumers should be prepared for this.

Blankfein was Chairman and Chief Executive Officer of global investment bank Goldman Sachs from 2006 to September 2018. He served as chairman until December 2018 and is now senior chairman of Goldman Sachs Group.

He was asked, “Do you think we’re heading for a recession?” Blankfein replied:

We are definitely moving forward. It’s certainly a very, very high risk factor…if I were running a large company, I would be well prepared for it. If I were a consumer, I would be prepared for it.

However, the senior Goldman Sachs chairman explained that a recession “doesn’t happen overnight,” noting that there is “a path” to avoid it.

Commenting on the Fed’s response to inflation, he said, “I think they’ve responded well.” He added, “I think the Fed has very powerful tools.”

Blankfein was asked whether the Fed is taking the steps it needs to control inflation. He replied: “There is an imbalance, there is too much demand. What you have to do is that demand.” The former Goldman Sachs CEO elaborated:

You have to down the economy. So they will have to raise interest rates. They will have to downsize, hopefully reducing the number of open jobs…and increasing the size of the workforce.

“This inflation, some of it is sticky … we have about 8% inflation. Some of it is temporary [and] will disappear. You know, eventually, the war in Ukraine will end. Some supply chain shocks will go away, but some of them will be more thorny and will be with us for a while,” he concluded.

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Many analysts predict a U.S. recession. Deutsche Bank says the U.S. will experience a deep recession next year. Blankfein’s own investment bank, Goldman Sachs, said there was a 35 percent chance of a recession within two years. In addition, Bank of America strategists warned in April that a “recession shock” was coming.

What do you think of Lloyd Blankfein’s comment? Let us know in the comments section below.

Kevin Helms

As an Austrian economics student, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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