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Investing.com -- Goldman Sachs Group Inc (NYSE:GS) CEO David Solomon delivered a sober assessment of the economic landscape on the bank’s Q1 2025 earnings call, warning that trade tensions and policy shifts are driving heightened uncertainty. Speaking to analysts, he noted that ongoing changes in U.S. trade policy “reset the prospect of forward growth pretty significantly all over the world.”

His perspective follows that of several other top CEOs, including JPMorgan's (NYSE:JPM) Jamie Dimon and Wells Fargo 's (NYSE:WFC) Charlie Scharf, who both pointed to similar uncertainty regarding the prospects of recession on Friday. BlackRock's (NYSE:BLK) Larry Fink also communicated his uncertainty, saying he was "petrified in the short term."

Solomon revealed that clients across global markets are expressing unease, particularly in Europe, where longstanding assumptions about trade and economic engagement with the U.S. are being reevaluated. “They don’t like the fact that certain constructs… are potentially changing,” Solomon said, referencing broad concerns over recent tariff implementations.

While Solomon acknowledged the administration’s goal of reinforcing America’s competitive posture, he stressed the importance of clarity and measured approaches. He gave a nod to recent signs of flexibility in trade negotiations, saying Goldman was “encouraged” by moves suggesting more gradual and considered negotiation strategies.

Still, Solomon warned that trade policy risks remain profound. “Fears over the potentially escalating effects of a trade war have created material risks to the U.S. and global economy,” he said, directly linking protectionist measures with broader economic challenges.

The macroeconomic picture, according to Goldman’s economic team, continues to darken. Solomon said internal forecasts for U.S. GDP growth were revised sharply downward to just 0.5%, from over 2% earlier in the year. “The prospect of a recession has increased,” he added, citing weakening economic activity around the globe.

Clients – from corporate CEOs to institutional investors – are increasingly hesitant, a mood Solomon tied to both immediate and structural uncertainty. “This has constrained their ability to make important decisions,” he observed, pointing to cautious hiring, reduced capital spending, and delayed M&A activity.

Though Solomon noted that growth was already decelerating prior to the latest trade measures, he emphasized that these moves have heightened the existing drag. Even so, he offered a measured optimism, urging clients to “go slow and take a pause… until we have more clarity around a lot of these issues.”

Despite short-term headwinds, Solomon maintained faith in the U.S. economic foundation. “The U.S. is the largest, most dynamic and resilient economy,” he said, predicting that strategic manufacturing and dollar strength will support long-run growth—even as near-term volatility remains the dominant theme.

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