Goldman chief Solomon sees very small chance of US recession

There is a “very small” chance that the US economy tips into a recession, despite the uncertainty surrounding global trade policy, according to Goldman Sachs chief executive David Solomon.

President Donald Trump is acting on the view that imbalances exist in trade, Solomon said at the Australian Financial Review Business Summit in Sydney on Tuesday.

“Exactly how he executes is some of the uncertainty I’m talking about,” Solomon said.

Trump said Monday he’s plowing ahead with new tariffs on Canada and Mexico. That’s contributing to volatility in equity and bond markets, with investors weighing up the prospect of a potential deterioration in global growth.

Meantime, the White House said Trump has signed an order doubling tariffs on China to 20 percent that will take effect shortly after midnight in Washington.

“The Chinese economy faces significant headwinds,” Solomon said Tuesday.

Blackstone Inc. CEO Steve Schwarzman earlier Tuesday told the same conference that his firm’s quarterly survey of the 250 companies it owns shows the US economy is in good shape, with none of the executives surveyed expecting a recession this year.

Solomon also said investors should carefully monitor how the credit cycle is impacting lenders and changing behavior.

“We’ve gone more than a decade without a regular normalized credit cycle,” he said. “Excess is building up, not necessarily in any way where it’s going to create a problem, but it’s important to look forward, understand the interconnectivity.”

Bloomberg