During an appearance on CBS, Goldman Sachs senior chairman Lloyd Blankfein predicted that the U.S. economy is at risk of entering a recession.
Speaking on CBS News’ “Face the Nation,” Blankfein warned that the American economy is racing toward an economic recession.
“We’re certainly heading — it’s certainly a very, very high risk factor,” he said when asked if a recession is coming.
Blankfein went on to explain that the Federal Reserve has “powerful tools” at its disposal to counteract the effects of the ongoing inflation crisis, but he stated that “it’s hard to finely tune them and it’s hard to see the effects of them quickly enough to alter it.”
With the current record-high gas prices and skyrocketing inflation, the American people are already struggling, but Blankfein believes it is going to get worse. During his interview, he warned Americans that they should prepare for an economic downturn.
“I think it’s definitely a risk,” he said regarding inflation. “If I were running a big company, I would be very prepared for it. If I was a consumer, I’d be prepared for it. But it’s not baked in the cake.”
Earlier in the interview, Blankfein discussed the possible causes of these economic issues. He stated that he believes the inflation crisis was caused by “too much growth, too much stimulus” in the midst of pandemic lockdowns and COVID-era stimulus bills, which overwhelmed the world economy with liquidity and demand after global markets reopened.
The Goldman Sachs senior chairman also agreed with an analysis published by the Federal Reserve of San Francisco which concluded that the inflation crisis was caused in part by Joe Biden’s COVID stimulus bill.
The analysis stated:
“Since the first half of 2021, U.S. inflation has increasingly outpaced inflation in other developed countries. Estimates suggest that fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021.”
According to reporting by Bloomberg News, Blankfein made his remarks on the same day that Goldman Sachs slashed its U.S. growth forecasts to account for the growing economic problems.
“Goldman’s economic team, led by Jan Hatzius, now expects U.S. gross domestic product to expand 2.4% this year, down from 2.6%. It reduced its 2023 estimate to 1.6% from 2.2%,” the outlet reported.