David Solomon, CEO of Goldman Sachs & Co.
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David Solomon, CEO of Goldman Sachs, said on Wednesday that the US economy is hampered by high unemployment and a rapid recovery from the coronavirus pandemic.
"The economic reality is that we are still in a very, very uncertain economic environment," said Solomon during a conference at the Economic Club of New York.
While economic activity has increased since the early weeks of the pandemic, a sustained increase in some cases has forced several states to stop or reverse their reopening plans. This happens when millions of unemployed are facing the end of improved performance while lawmakers are debating the outlines of the next aid package.
"I think this acceleration will slow down in the next few months. I think you will see worse economic data," said Solomon. "I think we're facing a very, very bumpy ride."
He added that the US will "have very, very high unemployment for a long time," particularly as the service industry will have difficulty returning to earlier levels even after a vaccine is made.
Solomon said he approved the financial response to the crisis because it prevented widespread suffering by depositing billions of dollars into workers 'and companies' bank accounts. This, along with the Federal Reserve's unprecedented market support measures, has helped equity indices stay near the all-time high.
"The markets are not connected to this at the moment," said Solomon, referring to his optimistic outlook. "They are responding to the fact that interest rates are zero and there is a belief in more monetary and fiscal incentives, and that has obviously supported asset prices."
In the long term, the United States is likely to experience slower growth, a weaker dollar, and huge debt related to paying for the crisis response. He noted that policymakers were just beginning to withdraw from the approach required by the previous crisis 10 years ago when the pandemic broke out.
"I think it will be a terribly long time before we find our way out," he said