“‘I’ve talked to a bunch of CEOs that operate businesses that would have good insight into what I’ll call a more paycheck-to-paycheck kind of spending behaviors. I think that in the last few months you see a pattern of those behaviors tightening up, which means that the lower part of the economy is a little softer.’”
The U.S. consumer continues to feel squeezed with less purchasing power than they had four years ago, especially among people living paycheck to paycheck, Goldman Sachs Group Inc. Chief Executive David Solomon said Tuesday.
While the service economy is strong, and the upper half of the economy in the U.S. remains robust, Solomon said the average American feels strained by prices that remain higher than before the COVID-19 pandemic, he said at the UBS Financial Services Conference.
“When you listen to the political narrative, you know there’s a lot talk about core inflation but at the end of the day, what do Americans care about? Their gas, their food and their housing,” Solomon said. “While the velocity of inflation has certainly slowed, prices are materially higher than they were four years ago.”
Echoing comments from rival Chief Executive Jamie Dimon at JPMorgan Chase & Co.
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Solomon said he’s more cautious than the overall market on the U.S. economy avoiding a recession.
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“I’ve talked to a bunch of CEOs that operate businesses that would have good insight into what I’ll call a more paycheck-to-paycheck kind of spending behaviors,” Solomon said. “I think that in the last few months you see a pattern of those behaviors tightening up, which means that the lower part of the economy is a little softer.”
While the market is mostly betting on a soft landing, “when you look at the pattern of facts in the last three or four years, it’s hard for me to see it’s going to be that simple,” Solomon said.
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Solomon also said he feels good about his leadership at the firm over the past five years.
Last year, Goldman
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sold its GreenSky lending unit and is scaling back its footprint in consumer finance, as it focuses on its two core units: asset and wealth management, and investment banking and global markets.
Solomon had come under fire last year over $3 billion in losses at the bank’s platform solutions unit, which houses its consumer lines of business, but the criticism has since died down. Goldman expanded into areas of retail banking during his reign, a move that would have been unheard of before the 2008 financial crisis.
Also read: Goldman Sachs could profit as IPO and merger activity ramp up: analyst
“The firm is now set up with two great businesses,” Solomon said on Tuesday. “Its not been a perfect journey. But there is no perfect journey when you’re dealing in the real world. We’re in a very good place and I feel very good about it.”
