Another Wall Street Bigwig Warns: Goldman Sachs CEO Says U.S. Recession Risk Rises, More Challenges Ahead

From Jamie Dimon, CEO of Morgan Stanley, to Larry Fink, CEO of BlackRock, more and more Wall Street heavyweights have recently warned about the significant impact that Trump's tariffs could have on the economic outlook of the US and the global economy. This week, David Solomon, CEO of Goldman Sachs, also joined the chorus of warnings. Goldman Sachs CEO: US Recession Risk Has Increased On Monday Eastern Time, Solomon stated that due to the uncertainty of the US trade war and the confusion of US corporate CEOs about future planning, the risk of a US economic recession has "increased." Solomon said, The US will face more challenges in the future, "The operating environment we entered in Q2 is significantly different from earlier this year" — and the reason is the uncertainty triggered by Trump's new tariffs. Solomon stated that, in fact, US economic growth had already "slowed down" before the Trump administration introduced new trade policies. And Trump's policies have "significantly reset the future growth prospects globally." Solomon added that Goldman's corporate and investment clients are "concerned about significant uncertainties in the near and long term, which limits their ability to make important decisions," and the uncertainty of the future path poses a "significant risk" to the US and global economy. "As more signs indicate that global economic activity is slowing down, the possibility of a recession has increased." Multiple Wall Street Heavyweights Have Issued Warnings In fact, last week, several Wall Street heavyweights had already issued several warnings about future economic uncertainties. "Wall Street's top dog," Jamie Dimon, CEO of JPMorgan Chase, said last week that the economy faces "considerable turbulence." He stated that although JPMorgan reported an increase in Q1 profits, "clients have become more cautious amid heightened market volatility driven by geopolitical and trade-related tensions." Larry Fink, CEO of BlackRock, also said last week, "The extent of the comprehensive tariff announcements exceeded my imagination in 49 years in the financial industry," and warned that the impact of tariffs could be widespread, "uncertainty and anxiety about the future of the market and the economy dominate client conversations." Goldman's Solomon said, "The Trump administration has recently taken action to seek a more gradual policy process, allowing thoughtful negotiations with many countries, which encourages us, but how future policies will evolve remains unknown. And during this period, the market may continue to fluctuate." The Financial System Has Been Disrupted In the past week, signs of pressure on Wall Street have undoubtedly been increasing. IPOs and merger projects on Wall Street have largely stalled, leveraged loan transactions have slowed, and bond issuances have been suspended. It has been proven that the chaos and uncertainty of Trump's trade policies have disrupted the financial system, and this disruption may continue in the future. It is reported that hedge funds have recently received the most severe margin calls since the COVID-19 pandemic in 2020, which means Wall Street banks are asking hedge funds to come up with cash to cover losses. This may have triggered more fire sales of losing positions. If the tariff turmoil worsens in the future, Wall Street banks' concerns will intensify. Even if Trump's tariffs do not actually trigger a recession, just a slowdown in economic growth could stifle merger and acquisition deals and loan demand. Ted Pick, CEO of Morgan Stanley, told analysts last Friday: "I think we are still on pause (for M&A deals)... We don't know if the economy will contract. We don't know what the inflation rate will be when the transmission effect occurs." "We believe that this pause can sometimes be frustrating... These deals take longer to reach," he added.