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Blankfein of Goldman Sachs Warns of a Recession

In an interview with CBS News that aired Sunday, Lloyd Blankfein, a former Goldman Sachs CEO who is now the firm's senior chairman, cautioned of an impending recession in the United States. He emphasized that businesses and consumers should be prepared.

From 2006 to September 2018, Blankfein was Chairman and Chief Executive Officer of Goldman Sachs, a worldwide investment firm. He served as chairman until December 2018 and is now the Goldman Sachs Group's senior chairman.

"Do you think we're heading for a recession?" he was asked. Blankfein responded, "

"We're definitely going. It is unquestionably a very high risk factor... If I were the CEO of a large corporation, I would be well prepared. If I were a customer, I'd be prepared."

A recession, however, is "not baked in the cake," according to Goldman Sachs' senior chairman, who added that there is a "narrow route" to prevent it.

"I think they're responding well," he remarked of the Federal Reserve's response to inflation. "I believe the Fed has very powerful tools," he added.

Blankfein was questioned if the Fed is doing enough to keep inflation under control. "There's an imbalance, too much demand," he responded. And what you need to do is reduce that demand." According to the former Goldman CEO,

"You must slow the economy down. As a result, they'll have to raise rates. They'll have to limit, and hopefully minimize, the number of unfilled posts... as well as expanding the labor force"

"Some of this inflation is sticky... We have an inflation rate of around 8%. Some of it is only temporary and will pass. You know, the war in Ukraine will end someday. Some supply chain shocks will fade away, but others will be more persistent and linger around for a long," he said.

A number of analysts anticipate that the United States will enter a recession. According to Deutsche Bank, the United States will experience a big recession next year. Goldman Sachs, Blankfein's own investment bank, has predicted a 35 percent chance of a recession in the next two years. Furthermore, in April, a Bank of America strategist predicted a "recession shock."

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