The senior chairman of Goldman Sachs shares the stark forecast for the US economy: “Very, very high risk of recession”.

Lloyd Blankfein, senior chairman of Goldman Sachs, warned on Sunday that the US economy was at risk of entering a recession.

What did Blankfein say?

Speaking on CBS News’ Face the Nation, Blankfein, the former CEO of Goldman Sachs, warned that the US is headed for an economic recession.

“We’re definitely on our way – it’s certainly a very, very high risk factor,” he said when asked if a recession was looming.

Blankfein said the Federal Reserve has “powerful tools” at its disposal to counteract the effects of the ongoing inflationary crisis, but he noted that “they are difficult to fine-tune and difficult to see the effects quickly enough to understand.” changing them.” So Blankfein said Americans should be prepared for an economic downturn.

“I think it’s definitely a risk,” he said of inflation. “If I were running a big company, I would be very prepared. If I were a consumer, I would be prepared for this. But it’s not baked in the cake.”

Goldman Sachs’ Lloyd Blankfein on inflation, the Fed and supply chain issues

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At the beginning of the interview, Blankfein said he believes the inflationary crisis was caused by “too much growth, too much stimulus” in the wake of the COVID lockdowns and subsequent stimulus packages, which flooded the global economy with liquidity and demand as global markets were reopened.

Blankfein also agreed with the Federal Reserve of San Francisco’s analysis, which concluded that the inflationary crisis was caused in part by President Joe Biden’s COVID stimulus bill.

This analysis specified:

Since the first half of 2021, US inflation has increasingly outpaced inflation in other developed economies. It is estimated that fiscal stimulus aimed at counteracting the severity of the economic impact of the pandemic may have contributed to this divergence by raising inflation by around 3 percentage points by the end of 2021.

Bloomberg News reported that Blankfein’s comments came on the same day that Goldman Sachs lowered its US growth forecasts to reflect mounting economic woes.

“Goldman’s economics team, led by Jan Hatzius, now expects US gross domestic product to grow 2.4% this year, up from 2.6%. It has reduced its estimate for 2023 to 1.6% from 2.2%,” Bloomberg reported.