Goldman Sachs Group CEO Solomon Warns US Recession Risk Remains Imminent

US Recession Risk Hangs in the Balance of Social Media

The risk of a US recession could rise suddenly depending on how the administration reacts to the Iran war on social media, according to Goldman Sachs Group Inc. Chief Executive Officer David Solomon. In an interview at the Paley Center for Media in Manhattan, Solomon stated that a larger or smaller risk of an economic downturn could be "only one tweet away," while current forecasts for a recession remain fairly low.

The remark highlights a broader reality in financial markets, which have been subject to significant fluctuations on social media posts by President Donald Trump. Last week, he posted about Iran agreeing to never close the Strait of Hormuz – a declaration that hadn't been confirmed by Iran – which sent the stock market rallying and oil prices falling.

Despite the uncertainty surrounding social media's impact on financial markets, Goldman's economists are forecasting chances of a recession this year at about 20%, only slightly higher than the 15% that's their base case in a "benign environment." The CEO warned that lasting high energy prices will likely impact economic data released later in the year.

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Solomon also warned that a severe escalation of the conflict could push oil prices to $170 a barrel. Benchmark crude futures have rallied about 30% since the war began, with prices spiking near $120 a barrel in March. However, they are currently trading around $95 on signs that Iran will attend talks with the US to end the conflict.