Take heart, President Trump. The head of one of the nation’s premier investment banks believes that no recession will occur next year.
To David Solomon, CEO of Goldman Sachs, “the chance of a U.S. recession between now and the election is small.” In an interview on Bloomberg Television, Solomon gave the odds of a recession before the November 2020 election as 25%.
That’s slightly greater prospects of a downturn than the ones he gave nine months ago (15%), Solomon added. The reason to forecast a slightly higher likelihood of a 2020 recession is the deeper uncertainty nowadays, the Goldman CEO explained.
If he’s right about no near-term recession, Donald Trump has reason to be cocky. History shows that presidents seeking second terms with good economies end up winning. That’s the conclusion of Moody’s Analytics, which back tested its data to 1980.
Incumbents with recessions or sluggish recoveries around their necks went down to defeat: Jimmy Carter in 1980 and George H.W. Bush in 1992 demonstrate that. Moody’s believes that Trump could surpass his 2016 electoral college victory next year, should the economy cooperate.
Solomon said that the US manufacturing sector hasn’t fared well lately. Still, he noted that consumers are still spending well, amid record low unemployment and (slight) wage gains.
He takes heart about a seeming positive break in US-China trade tensions. “If you’re watching what’s coming out of the administration in Washington, if you are listening what’s coming out of China,” he said, “I think it feels like both are incentivized to have some sort of a phase one deal, so there looks like some progress, some movement forward.”
The Goldman chief has previously expressed leeriness about the trade war.