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Goldman Sachs CEO fears recession more than his own economists: NPR

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David Solomon, Chairman and CEO of Goldman Sachs.

Patrick T. Fallon/AFP via Getty Images


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Patrick T. Fallon/AFP via Getty Images


David Solomon, Chairman and CEO of Goldman Sachs.

Patrick T. Fallon/AFP via Getty Images

For college graduates who want to earn money and live in New York, getting a job at Goldman Sachs is the golden ticket. And getting a job at Goldman is still harder than getting into Harvard University.

“We have about 3,500 students starting their careers here this week,” CEO David Solomon says in an interview with NPR. “That’s 3,500 out of more than 300,000 people who have applied for these positions.”

These new hires are sure to notice that many of their colleagues are also young.

“Half of our organization is in their 20s,” says Solomon, who moonlights as DJ D-Sol. Next week he will perform at Lollapalooza along with Dua Lipa, Doja Cat and Metallica. (Solomon notes that he will donate his performance fee to charity and also plans to meet with clients in Chicago.)

David Solomon performing as DJ D-Sol at the Fontainebleau Hotel in Miami Beach, Florida on February 1, 2020.

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David Solomon performing as DJ D-Sol at the Fontainebleau Hotel in Miami Beach, Florida on February 1, 2020.

Craig Barritt/Getty Images

Since he became CEO of Goldman in 2018, Solomon has made some changes to the bank’s culture, including a laid-back dress code and more flexibility when it comes to vacations.

But at the start of the pandemic, Solomon drew a line in the sand and didn’t budge: Solomon doesn’t want his employees to work from home in pajamas forever. He thinks they should be in the office.

“They come to Goldman Sachs to be trained, mentored, learn and grow,” says Solomon. “And it just doesn’t happen at the same rate if they’re not there, sharing the experience with others.”

Banking analysts who closely monitor the bank’s performance say that as the business environment worsens, Goldman’s emphasis on personal collaboration will become an advantage, or at least a differentiator.

“The Goldman culture is very important,” says Gerard Cassidy, managing director of banking capital research at RBC Capital Markets. “It’s the corporate spirit. Eat what you kill. And it works very effectively. But it really worked because everyone was in the office.”

This certainly ensures that Goldman employees, especially newcomers, gain a deep understanding of the business as a whole. A wide range of clients from all over the world, from governments and corporations to institutions and individuals, turn to the bank for advice.

As the CEO of a bank, Solomon has a bird’s eye view of the global economy, and right now he sees a lot of uncertainty.

The Federal Reserve is raising interest rates aggressively to fight high inflation, and while Goldman’s staff economists are betting on a 50 percent chance of a recession in the next two years, Solomon fears the odds are even worse.

“It doesn’t bother me, but I think the likelihood of a recession in the next 24 months is high,” he says.

Goldman Sachs is taking steps to prepare for a deeper economic downturn. When he reported second-quarter earnings on Monday, he said he set aside $667 million to cover possible losses, and the company’s chief financial officer announced the bank plans to “take on staff slowly.”

Mike Mayo, banking analyst at Wells Fargo Securities, says current market conditions are particularly challenging for Wall Street banks. This year, he notes, “we are experiencing the biggest drop in stocks and bonds in more than 50 years.”

But, according to Mayo, Goldman can act nimbly when circumstances change. “Goldman Sachs is the exact opposite of the oil tanker analogy,” he says.

Solomon is leading the Small Business Summit of 10,000 in Washington this week. In a recent survey by Goldman Sachs, 93% of small business owners who responded said they were worried about a recession next year.

Solomon says agility and flexibility will be key for all businesses in the coming months, including his own.

He says what he admires most about the small business owners he approaches is their optimism in the face of economic uncertainty.

“They are optimists. They work hard. They are ambitious,” he says. “They are very independent in what they do.”

Goldman Sachs headquarters in New York.

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Goldman Sachs headquarters in New York.

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#Goldman #Sachs #CEO #fears #recession #economists #NPR

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