During the summer of 2022, a debate between politicians, economists, and market professionals raged on whether the U.S. was in a recession. The conclusion was boiled down to how the word is defined in and of itself without a proper yes or no answer.
Meanwhile, 98% of CEOs are preparing their business for an oncoming recession in the U.S. and Europe, with the expectations that the one in the U.S. will be short and shallow, according to The Conference Board survey conducted on October 13.
Furthermore, Goldman Sachs (NYSE: GS) CEO, David Solomon, was a guest on CNBC’s Squawk Box on October 18, confirming that there is ‘a good chance of a recession’ in the U.S.
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Solomon noted, “there’s no question we’re tightening economic conditions relatively quickly,” pointing out that “at some point, there’s going to be a bigger impact on consumer behavior.”
He opined:
“I think it’s a time to be cautious. And I think if you’re running a risk-based business, it’s a time to think more cautiously about your risk box, your risk appetite. I think you have to expect that there is more volatility on the horizon. Now that doesn’t mean for sure that we will have a very difficult economic scenario, but in the distribution of outcomes, there is a good chance we can have a recession in the U.S.”
Asset appreciation
Solomon continued discussing previous speed bumps in the U.S. markets and the fact that easier money and asset appreciation came along for the investors that held their breath during those speed bumps in the markets, but that the environment now is a bit different.
“In an environment where inflation is more embedded, and growth is lower, asset appreciation will be tougher. Now, are we going to get rooted in that kind of decade-long scenario, I don’t know. The policy decisions we make from here will have an impact.”
Whether this slow growth period continues beyond 2022 will depend on numerous policy decisions by the U.S., but also on other global macro factors, and whether the world will be more divided going into the future or a true global village.
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