Goldman Sachs CEO Says There’s a ‘Good Chance’ of a 2023 Recession

An elderly couple are discussing something on a laptop screen.

Image source: Getty Images

The top investment banker says it’s time to be careful.


Important points

  • Goldman Sachs CEO David Solomon says it’s time to be cautious as we could be headed for a recession.
  • Solomon warned that economists are forecasting slow to no growth in the US and negative growth in parts of Europe.
  • There are several ways consumers and investors can prepare for a possible downturn.

Hardly a day goes by without a prominent figure warning of an impending recession. Today it was Goldman Sachs CEO David Solomon’s turn to step up and ring the economic alarm bell. Solomon told CNBC that while a recession is not a certainty, we may well be headed for a downturn.

The investment bank chief said the world had changed and companies were adjusting to the new status quo. It’s not clear what will happen, but he believes there is a strong possibility of economic collapse. “In terms of the distribution of the results, there’s a good chance we have a recession in the United States,” he said.

Goldman Sachs CEO says it’s time to be careful

Discover: This credit card has a rare $300 welcome bonus

More: These 0% introductory APR credit cards made our leaderboard

“I think it’s time to be careful,” Solomon said. He added: “If you look at what most economists are predicting, they are predicting slow to no growth in the US. They predict negative growth in other developed economies in Europe. And so this environment that’s heading into 2023 is one that you have to be careful about and be prepared for.”

Also Read :  Federal Deficit Could Widen as Economy Slows, Borrowing Costs Rise

For consumers and investors, caution can take different forms. Many investors have already seen the value of their portfolios fall in recent months and expect further falls in value. As a long-term investor, it’s important to position yourself so that you don’t have to sell your brokerage positions at a loss if the market continues to fall. Historically, the stock market has always bounced back at some point, so it’s all about making sure you can weather the storm.

As a consumer, caution may be needed to build a larger emergency fund and avoid taking on high-interest debt. So far, the Fed has failed to get inflation under control, which means we will see more rate hikes to curb cost-of-living growth. A recession could also lead to widespread job losses. In the face of a potential double whammy of price hikes and layoffs, it is all the more important to have a financial cushion ready in an accessible savings account.

Ways to protect yourself from economic uncertainty

It’s all too easy to read recession headlines and think the sky is falling. If fears of an economic slump in the next year are already keeping you up at night, try zooming out. Knowing that recessions are part of a cycle and that even severe downturns pass eventually might help. We’ve already had three recessions in the last few decades, and each time the economy has recovered.

Also Read :  98% of CEOs are prepping for US recession: survey

Another way to keep those middle-of-the-night worries at bay is to focus on what you can do now to prepare. We’ve already touched on the importance of investing for the long term and building an emergency fund. Here are some more concrete steps you can take to recession-proof your finances:

  • Maintain your credit rating: When the economy is tight, it could become harder to borrow money, making it more important to have a strong credit history. Common ways to improve your score include paying all your bills on time, reducing debt to improve your credit utilization rate, and making sure there are no errors on your credit report. If you’re already struggling to pay bills, talk to your creditors to see if there’s a way to remove non-payment black marks from your file.
  • Consider a side hustle: There are two benefits to having an additional stream of income during an economic downturn. One is that you have extra money in the bank that could help you build your emergency savings or pay off debt. Another reason is that you can still make some money if you lose your job. However, there is also a caveat: Don’t neglect your main job in favor of your part-time job. Getting fired for your efforts to diversify your income streams would be counterproductive.
  • Live according to your possibilities: Ensuring you’re spending less than you earn is good practice, whether or not there’s an economic storm on the horizon. Think about where your money is going and look for areas where you can make savings. Try to aggressively focus on what you need rather than what you want, even if it means adopting a more frugal mindset.
Also Read :  How Taxes Affect Retirement Savings (and What to Do About It)

David Solomon says recession is not inevitable. Instead of worrying about the gathering economic clouds, you can still see them as an opportunity to build a stronger financial foundation. If you can adopt different financial habits now, you’ll be better positioned not only to weather a recession, but also to build wealth and financial security for the future.

Warning: The top cashback card we’ve seen now has an introductory APR of 0% through 2024

Using the wrong credit or debit card can cost you a lot of money. Our expert loves this top pick, which offers an introductory APR of 0% through 2024, an insane cashback rate of up to 5%, and all of it sort of with no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

Source

Leave a Reply

Your email address will not be published.