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The chief executive of Goldman Sachs said on Tuesday that the U.S. government will continue to grow as the incoming Donald Trump administration promises policies that could stimulate or curb growth and increase budget deficits. He said the economy was in a “fragile situation”.
David Solomon said he is “incredibly optimistic” and expects the significant deregulation promised by President Trump will spur business investment.
But he also warned of the potential impact of Trump’s plan to crack down on immigration, including deporting millions of immigrants who are in the U.S. illegally.
Solomon said the recent rise in long-term interest rates (the yield on the 10-year Treasury note reached 4.79% on Tuesday) primarily reflects market expectations for continued growth in U.S. government debt. said.
“I’m pretty optimistic, but we’re in a more vulnerable situation,” he told a New York conference hosted by the National Retail Federation, an industry group.
Solomon argued that regulations imposed by President Joe Biden’s administration are causing CEOs to postpone investments. The incoming Trump administration “sent a clear message that we want to reverse this. I think this is very constructive and positive for growth and investment,” he added.
He said renewals of the tax cuts passed by President Trump when he first took office, many of which are set to expire this year, “could be a stimulus package.”
Solomon said there are other things the administration is talking about, such as President Trump’s threats to impose new tariffs on trading partners and limit immigration, and we really need to see how things move forward. Ta.
Secure borders are important, he said. “But when you think about deportation, it’s very, very important to balance all of that with continued immigration growth, and we have to get that balance right,” Solomon said.
“We have a cocktail of changes, some of which are very constructive for growth and others that can slow growth. “I think it’s about how it all balances out,” he said. Said.
The government bond market has been selling in recent months, and interest rates rose further after last week’s unexpectedly strong U.S. jobs report.
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Solomon said he doesn’t think the recent rise in yields reflects expectations that the Fed will become more hawkish or concerns that strong inflation will continue.
He said: “Our debt has really gone up. If you look at the deficit as a percentage of GDP. If you look at some of the policy decisions, it’s really important to actually control spending, deficits and debt levels. I think so.”
Solomon added: “And one of the things that’s happening now is that real bond buyers are starting to realize that there’s a lot of financing coming up for the rest of the decade, and that’s pushing up long-term interest rates. I think it means they are paying attention and saying things.” That hasn’t happened for a long time, but I think this is a change and something worth noting. ”
