Goldman Sachs CEO Solomon: U.S. economic outlook may "depend on just one tweet"

Source: Jinse Finance

Goldman Sachs CEO David Solomon recently stated that whether the US economy will fall into recession largely depends on the government’s statements about the Iran conflict on social media. He bluntly said that volatility in economic prospects may “depend on nothing more than a tweet.”

In an interview at the Paley Center for Media in Manhattan, Solomon pointed out that although current economic forecasting models show that the risk of recession is still at a relatively low level, this stability is extremely fragile.

This statement reflects a harsh reality in today’s financial markets: Trump’s remarks on platforms like Truth Social are constantly affecting the nerves of the markets. Last week, Trump said on social media that Iran had agreed never to close the Strait of Hormuz. Although the message was not officially confirmed by Iran, it quickly triggered a US stock rally and a drop in oil prices.

Regarding Solomon’s statement, Goldman Sachs spokesman Tony Fratto later added that this was clearly a humorous comment by Solomon about the current phenomenon of “governing through social media.”

In terms of specific economic indicators, Goldman Sachs economists currently estimate the probability of a US economic recession this year at about 20%. In a “benign environment”, the baseline probability is usually 15%, so the current forecast has been slightly raised.

Energy prices are another key variable Solomon is watching. He believes that it is reasonable to expect crude oil prices to stay in the range of $80 to $100 per barrel over the next three to six months. However, he warned that if geopolitical conflicts escalate severely, oil prices could be pushed up to $170 per barrel.

Since the conflict broke out, crude oil futures benchmark prices have risen by about 30% in total. In March this year, oil prices once soared to nearly $120, and although they have since fallen back to around $95 due to Iran showing signs of engaging with the US, Solomon emphasized that sustained high energy costs will inevitably have a negative impact on various economic data later this year.

In his latest interview, Trump said that he had expected the Dow and S&P 500 to drop by 20%—the measure of a bear market—and oil prices to reach $200 per barrel.

Trump stated: “If you had told me back then oil would rise to $90, not $200, I’d definitely be surprised. And now, what’s happening is that ships are searching for other energy sources. They’re heading to Texas and Louisiana, to Alaska, and elsewhere. It’s a remarkable phenomenon.”

Regarding the stock market, he said that before the war he had expected a sharp sell-off. Trump said, “Look at the S&P 500, its value is exactly the same as when we started all of this. I originally thought it would fall 20% or drop significantly and that oil prices would be higher, and now I’m happy to say that’s not the case.”