Insights on Consumer Spending Behaviors

"I’ve talked to a bunch of CEOs that operate businesses that would have good insight into what I’ll call a more paycheck-to-paycheck kind of spending behaviors. I think that in the last few months you see a pattern of those behaviors tightening up, which means that the lower part of the economy is a little softer.”

Economic Outlook and Consumer Sentiment

The U.S. consumer continues to feel squeezed with less purchasing power than they had four years ago, especially among people living paycheck to paycheck, according to Goldman Sachs Group Inc. Chief Executive David Solomon. While the service economy is strong, and the upper half of the economy in the U.S. remains robust, Solomon highlighted that the average American feels strained by prices that remain higher than before the COVID-19 pandemic.

Impact of Price Increase on Average Americans

“When you listen to the political narrative, you know there’s a lot talk about core inflation but at the end of the day, what do Americans care about? Their gas, their food and their housing,” Solomon pointed out. “While the velocity of inflation has certainly slowed, prices are materially higher than they were four years ago.”

Market Caution and Avoidance of Recession

Solomon also echoed comments from his counterpart Jamie Dimon at JPMorgan Chase & Co., expressing caution in comparison to the overall market sentiment about the U.S. economy avoiding a recession.

Additional Reading: Jamie Dimon's Perspective

Also read: Jamie Dimon doesn’t see an AI bubble: ‘This is not hype. This is real’

Insights into Consumer Spending Behaviors

"I’ve talked to a bunch of CEOs that operate businesses that would have good insight into what I’ll call a more paycheck-to-paycheck kind of spending behaviors," stated Solomon. "I think that in the last few months you see a pattern of those behaviors tightening up, which means that the lower part of the economy is a little softer."

Challenging Market Predictions

While the market is mostly betting on a soft landing, Solomon expressed his skepticism, "when you look at the pattern of facts in the last three or four years, it’s hard for me to see it’s going to be that simple."

Growth and Changes at Goldman

Last year, Goldman sold its GreenSky lending unit and is scaling back its footprint in consumer finance, emphasizing its core units: asset and wealth management, and investment banking and global markets.

Solomon reflected on his leadership at the firm over the past five years, stating that he feels confident in the direction it has taken.

Continued Evolution

Goldman faced scrutiny over losses in its platform solutions unit last year, but Solomon emphasized the firm's resilience. Despite challenges, Goldman's expansion into retail banking under his leadership marks a significant shift from its pre-2008 practices.

Solomon highlighted the firm's current positioning with pride, stating, "The firm is now set up with two great businesses. It's not been a perfect journey. But there is no perfect journey when you're dealing in the real world. We're in a very good place and I feel very good about it."