July 20, 2022: -On Monday, Goldman Sachs CEO David Solomon said that inflation is profoundly entrenched in the global economy and whether the situation will improve later this year is imprecise.
“We see inflation entrenched in the economy, and what’s not common about this particular period is that demand and supply are being affected by exogenous events, i.e., the pandemic and the war on Ukraine,” Solomon told analysts.
Solomon, leading one of Wall Street’s top advisors to corporations, then laid out one of the existing central debates in markets: It is known that inflation is at multidecade highs, but how long will it persist?
“In my dialogue with CEOs operating big global businesses, they tell me that they continue to experience persistent inflation in their supply chains,” Solomon said. “Our economists say there are signs that inflation will move lower in the year’s second half. The answer is uncertain, and we will all be witnessing it very closely.”
He said that as central banks worldwide continue to tighten financial conditions to combat inflation, volatile markets across asset classes will remain choppy.
The chief is concerned that the campaign to fight inflation will take a toll on “corporate confidence and consumer activity in the economy,” Solomon told an analyst.
The uncertainty has Solomon, who operates his New York-based bank cautiously, examining its spending plans. According to CFO Denis Coleman, the firm has opted to decrease its rate of recent hires, cut the professional fees it pays, and reinstate annual performance reviews for staff this year.
“I expect there’s going to be volatility, and there’s going to be more uncertainty, and in light of the present environment, we will take care of all our resources cautiously,” Solomon said.