Goldman CEO sees solid US economy but flags Middle East and tariffs as risks

Speaking at the financial leaders' summit of the G20 in Asheville, North Carolina, Goldman Sachs Group Inc Chairman and Chief Executive Officer David Solomon told CNBC that his view on the U.S. economy is "pretty constructive." He cited a resilient consumer, a large investment cycle and extraordinary earnings growth as foundations of that optimism. Solomon acknowledged headwinds from the Middle East situation as well as trade policy and tariffs, although he did not give an explicit forecast for oil prices.

The economy is performing well overall, according to Solomon, though he noted it is not without friction. Looking further ahead, he suggested that the integration of artificial intelligence into the economy and business operations presents a genuine chance to raise the underlying growth rate over the coming five to ten years through productivity gains. He cautioned, however, that the trajectory will not be a straight line and that not every individual AI bet will succeed.

On whether the debt-financed AI investment wave presents a credit concern, Solomon said he does not currently perceive much risk in the system. He pointed out that much of the credit issuance supporting the buildout comes from very large companies with fundamentally strong cash flow, which are choosing to redirect earnings from other parts of their operations into the growth cycle. He admitted that some areas will likely go too far and that a recalibration could happen at some stage, but he said Goldman is monitoring the situation closely and is not particularly worried at this point.

Turning to rates and currency policy, Solomon addressed recent interventions in the Treasury and yen markets. He noted he had reviewed Treasury Secretary Scott Bessent's own remarks on the matter beforehand. He described such moves as signals rather than actions that fundamentally shift market trajectory, using Japan as an example where intervention communicates commitment without necessarily changing the currency's underlying path, given the efficiency of the world's largest markets in settling at their own levels. Regarding the broader increase in the term Treasury premium, Solomon attributed the development to a longer-term trend shaped by U.S. fiscal spending policy, more embedded inflation in the economy and higher growth, rather than to any single event. He added that roughly 5 percent term premium is not a calamity compared with historical norms and that such premiums have been larger in the past without triggering crisis conditions, offering a measured, data-based counterweight to more alarming interpretations of the recent move in long-end yields.

Solomon's remarks on the term Treasury premium are the most market-relevant detail in the interview, framing the recent increase as a longer-term trend driven by fiscal spending, embedded inflation and stronger growth rather than a one-off dislocation. He explicitly said a 5 percent premium is not a calamity by historical standards, gently pushing back against narratives that treat rising long-end yields as an alarm signal. His view that large-cap AI-related credit issuance is backed by strong underlying cash flow, while acknowledging some future recalibration is likely, offers a measured counterpoint to more bearish credit-market commentary. On rates and currency intervention, Solomon treated recent Treasury and yen actions as signalling exercises rather than moves that alter the underlying market trajectory, consistent with his broader message that markets are efficient enough to find their own levels regardless of official jawboning.

Goldman's Solomon says the U.S. economy is in good shape and a higher term Treasury premium is a fiscal story, not a five-alarm fire.

Summary:

• Goldman Sachs CEO David Solomon told CNBC at the G20 finance leaders' meeting in Asheville that his outlook for the U.S. economy is "pretty constructive," citing a resilient consumer, a large investment cycle and extraordinary earnings growth.
• He flagged the situation in the Middle East and trade policy and tariffs as headwinds, without offering a specific view on oil prices.
• On the debt-fuelled AI investment buildout, Solomon said he does not see a lot of risk in the system currently, since much of the credit issuance comes from large companies with strong underlying cash flow, though he expects some recalibration eventually.
• Asked about recent Treasury and yen market interventions, Solomon called them signalling actions rather than moves that change the underlying market trajectory, given how efficient large markets are at finding their own levels.
• He described the rise in the term Treasury premium as a longer-term trend reflective of fiscal spending policy, embedded inflation and higher growth, saying a roughly 5 percent premium is not a calamity in historical context.
• Looking further out, Solomon said AI's productivity gains could support a fundamentally higher growth rate over the next five to ten years, while acknowledging the path will not be a straight line and that some individual AI investments will fail.