Goldman’s Blankfein says US facing ‘very, very high risk’ of recession

Goldman Sachs senior chairman and former CEO Lloyd Blankfein said on Sunday that the U.S. should prepare for a recession.

When asked by CBS’s Margaret Brennan if he thought the country is heading for a recession, Blankfein responded that “it’s certainly a very, very high risk factor.”

“It’s definitely a risk. If I were running a big company, I would be very prepared for it. If I was a consumer, I’d be prepared for it. But it’s not baked in the cake,” he added in the “Face the Nation” appearance.

Blankfein added that he thinks “the Fed has very powerful tools” to influence the economy, but noted it can be “hard to see the effects of them quickly enough to alter it.”

Federal Reserve Chairman Jerome Powell, who was last week confirmed by the Senate for a second term in his role, has said a “soft landing” — bringing down inflation without triggering a recession — would be “quite challenging.”

The annual inflation rate recently dropped slightly to 8.3 percent in April from 8.5 percent in March, which was four-decade high. President Biden has called fighting inflation his chief domestic priority.

Powell has said that getting inflation down to the the Fed’s 2 percent annual target “will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels.”

When asked about those comments, Blankfein said some factors driving inflation will be “stickier” than others.

“Some of that is transitory will go away,” he explained. “Eventually the war in the Ukraine will be over. Some of the supply chain shocks will go away, but some of it will be a little bit stickier and will be with us for a while.”