From Big Bear to Big Bull, Goldman Sachs Changes Its Stance

In an interview with CNBC, Goldman Sachs CEO David Solomon said, “I think the U.S. economy is chugging along pretty well. I think the U.S. economy is growing at trend at the moment.” CNBC also reported that Solomon said, “The chances of the U.S. economy soon entering a recession are lower now than they were earlier this year.”

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Previously, Goldman Sachs held quite bearish views on the US economy as well as equity markets. In January, Solomon had put the chances of a US recession at “fifteen percent this year, 50 percent next year.” However, Solomon also admitted that he’s “not good at predicting these things.”

After US markets (SPY) rallied in January, Goldman Sachs had put out a note of caution. Peter Oppenheimer, chief global equity strategist at Goldman Sachs, said, “It’s worth noting that we expect pretty weak profit growth across all major regions this year.” Oppenheimer also said, “That’s where we get this idea of a sort of skinny and flat market, relatively low returns in a reasonably narrow trading range.”

However, while several fund managers were predicting a recession in the near term, so far, the economic data doesn’t seem to suggest that we’re headed straight away into a recession. While the US economy is expected to grow at a slower pace this year than last year, the odds of a recession look pretty slight. Equity markets have rebounded after the fourth-quarter sell-off.