Goldman Sachs CEO doesn't expect a recession soon

[00:00:00] Speaker 1: - Ten years into an economic recovery, the longest expansion in history, things seem really solid to me. They always say that expansions don't die of old age, they die from policy mistakes. What do you see out there? [00:00:14] Speaker 2: - Well, first I just want to echo that I think when you look at the base economy, the base economy is chugging along okay. And while it has been a long cycle, it was a very deep recession the last time, and it was a gradual, slow climb out. So it's not surprising that maybe this has gone on for a longer period of time. I think the economy's doing fine. There are things that are getting added to the equation, in particular the trade war with China, that is having an impact. It's having an impact on growth. I don't think that impact is significant yet, but we're watching that very, very carefully. And I think those are the kinds of things, what's going on with monetary policy, what's going on with trade, how that's all linked, that has the potential to slow down growth if it's not handled correctly over time. [00:00:58] Speaker 1: You've got the president who is really embarking on a tough trade war with China, and then he's at the same time saying that the Fed should be the one to mitigate the damage from his trade war. So in a way, he paints the Fed into a corner a bit, doesn't he? [00:01:12] Speaker 2: Well, it's, you know, I think it's very, very important that we have an independent Fed. But I would observe, and this is not just a U.S. observation, when you look around the world, and I think this is the result of the fact that the world has in some way gotten used to the very, very significant, you know, easy money monetary policy that's a result of the crisis. Monetary policy to me seems a little bit more attached to markets at the moment and also to politics. Is that healthy? That's something to watch carefully. I don't think that is healthy, and I think that's something to watch carefully. And you're right, when you put trade policies into place, they do have an impact, you know, on the economy, and we have to live with that impact. [00:01:52] Speaker 1: American business leaders for years have complained about Chinese trade practices, and many are, say, the president is doing the right thing, but maybe in the wrong way, you know, and that's what they're concerned about, that maybe tariffs aren't the right way to do it. [00:02:02] Speaker 2: Is there a better way to do it? I think that's a complicated equation. I'm not a fan of tariffs, but, you know, we need to find a way to push. You know, personally, I think we've got to be candid and honest about the fact that this is something that's going to be hard. It's going to be hard for all of us as Americans. There'll be some friction to all of us as Americans for pushing at this relationship, because we're very economically entwined. But we have to do it, and we have to be prepared to see it through and get to a better place, because it hasn't been fair. [00:02:30] Speaker 1: Senators Elizabeth Warren and Bernie Sanders want to break up the banks. Several of the Democrats want new taxes on Wall Street trades. And they say that the super rich should pay to help minimize or ameliorate the income inequality, the trade, the income gap in this country. Do they have the right idea? [00:02:48] Speaker 2: There's no question that, you know, we've operated in an industry that has been the focus of a lot of discussion appropriately since the financial crisis. You know, the first thing I just say is that legislators in Washington around regulation did a very, very good job in improving the safety and soundness of the system. And that's something that we all benefited from. We're in a political election cycle. I have no idea where that election cycle is going to go. There are a number of things that you talked about that I wouldn't personally agree with or think are good for all of us as Americans in an economy where we want to create opportunity and bring people along. But we'll have to wait and see. [00:03:23] Speaker 1: What about the free college and the wiping out student loan debt and some of these other ideas that seem to be getting a lot of attention, at least in the primary part of this election cycle? [00:03:31] Speaker 2: We've morphed to a place where I think the rhetoric in the country is that the path to opportunity, the only path to opportunity is a college education. And it's a path to opportunity, but there are a lot of other paths. And you look around the world, apprenticeship programs and other skills-based training. I think there are a lot of paths to opportunity, and I think we have to think about programs and where we allocate our dollars to do what we can do to open up opportunity, continue to open up opportunity to as broad a group of Americans as possible. And I'm not sure that free college for everyone is a plan that will do that. [00:04:07] Speaker 1: What role do corporate leaders have in the gun violence debate? And are your employees making any questions or demands of you? Do you advise companies that are in the gun business or retailers that are in the gun business still? [00:04:19] Speaker 2: First, I just have to start by saying that my heart just goes out to all the people that have been affected by these horrible tragedies. It's just, I can't, I can't imagine what it's like to live through one of these tragedies, and this just has to stop. This has to stop. We need our government officials, our legislators, to come together, Democrats and Republicans, and try to improve the framework through which we all operate. Goldman Sachs does not do business with people that manufacture assault weapons, bump stocks, high-capacity magazines. That's been our policy for a long time. We do do business with retailers who sell guns, but we're thinking about what we should do and how we can contribute to this debate. But at the end of the day, this is not something that private business can legislate. This needs to be legislated by law. And I think it's time for our political leaders to come together on something that's so tragic for our country and make some progress. [00:05:20] Speaker 1: So you don't think boycotts are the answer, you think policy is the answer? [00:05:23] Speaker 2: Policy is the answer. You can, at the margin, at the margin, boycotts create discussion and hopefully they put pressure on legislators, but we need policy that changes this. If you want real wholesale change, in my opinion, we need policy change.