America has embarked on the long road to recovery following the pandemic lockdown, but the path back to a healthy economy is littered with obstacles, according to Goldman Sachs’ CEO.
“It will be a very very bumpy ride economically,” Goldman Sachs (GS) CEO David Solomon said Wednesday during an event with the Economic Club of New York.
Parts of the economy have shown signs of improvement in recent months, with the unemployment rate falling from its April peak and retail sales bouncing back. But this rebound could fizzle out in the coming months, Solomon warned.
“Even if – in the best case scenario – that the virus is eradicated or much more controlled […] I think we’ll run with very, very high unemployment for an extended period of time,” Solomon said, adding that America is still in the early stages of feeling the pandemic’s effect on the economy.
In June, the unemployment rate stood at 11.1%, higher than the worst period of the 2007-09 financial crisis.
“This crisis is a human crisis: It has a human toll and a human impact,” Solomon said. “I think the economic scenario is uncertain [and] concerning, and I think markets are disconnected from that at the moment.”
While Solomon views Washington’s policy response as both strong and appropriate, he said more stimulus should be provided – even at its high cost – to avoid a worse situation later. “I personally think it’s the right thing to do,” he said.
That said, “there are real consequences to this. There is no free lunch,” he added.
America’s deficit is ballooning already, and more fiscal stimulus is likely on the horizon.
The private sector, meanwhile, also has an important role to play, Solomon said. The pandemic has led to a divisiveness across the country, he acknowledged, but leaders in the private sector can play a role in building a bridge.