Goldman Sachs Chief Warns Recession Risk ‘Very, Very High’

 

Lloyd Blankfein, the former chief executive officer at Goldman Sachs, speaks at the annual DealBook conference in New York, Nov. 1, 2018. The U.S. Justice Department revealed that a former Goldman partner pleaded guilty to bribery charges, clouding Blankfein’s final weeks as chairman.  MIKE COHEN / The New York Times

https://www.dailywire.com/news/goldman-sachs-chief-warns-recession-risk-very-very-high 

The risk of the U.S. falling into a recession is “very, very high,” Goldman Sachs Chairman Lloyd Blankfein warned Sunday, saying citizens and corporations alike must prepare for the worst.

Blankfein, the investment bank’s former chief executive and current senior chairman, issued the grim warning on the CBS program “Face the Nation.” It comes as inflation is tracking at 8.3 percent over this time last year, economic growth fell into negative numbers for the first quarter of the year, and the national debt has topped $30 trillion.

“If I were running a big company, I would be very prepared for it,” Blankfein said. “If I was a consumer, I’d be prepared for it.”

The Federal Reserve raised its benchmark interest rate by a half-point earlier this month, in a strong, but expected move to slow surging inflation amid the negative economic growth. The central bank is expected to continue raising the rate through the end of the year after holding it at or near zero for several years. It normally raises or lowers the rate in quarter-point increments, and the half-point increase, which followed a quarter-point boost in March, was the biggest jump since May, 2000. The current federal funds target rate is between .75% and 1%.

A recession is defined as two straight quarters of negative economic growth. A recession coupled with surging inflation is dubbed “stagflation” by economists.

Blankfein said a recession is “not baked in the cake” and claimed the Federal Reserve has been “responding well” to the threat.

Blankfein’s warning came as Goldman’s economists cut their forecasts for U.S. economic growth this year and next. It now expects GDP to expand 2.4% this year, down from 2.6%. It cut its 2023 estimate to 1.6% from 2.2%.

Last month, a top economist warned that the entire globe is already in the early stages of a “very significant” recession.

“It’s going to be a global recession pulling down [the] Euro zone in particular,” Piper Sandler Chief Global Economist Nancy Lazar told Fox Business anchor Maria Bartiromo, noting that “it looks like China GDP in the second quarter could also be negative.”

The doom and gloom comes as Americans grapple with surging gasoline, food, and housing prices, as well as a shortage of baby formula. U.S. consumer sentiment plunged in early May to the lowest level since 2011.

“Joe Biden inherited a robust economy from President Trump and has managed to fully squander it — leading Americans into stagflation,” the Republican National Committee tweeted earlier this month.

Last week, the Senate voted 80-19 to confirm Federal Reserve Chair Jerome Powell to a second term, despite the roaring inflation, which he last year dismissed as “transitory.”

After raising the Fed rate earlier this month, Powell told reporters he believes the Fed can lower inflation without triggering a recession.

“We have a good chance to have a soft or softish landing,” he said. “The economy is strong and is well-positioned to handle tighter monetary policy.”