Goldman Sachs CEO Has a Bold Prediction For the Economy

After a year of tightening economic conditions amid a consistently increasing Fed rate, the S&P 500 -- closing more than 20% up from its October 2022 low -- has entered the early days of a bull market. 

In the midst of this new environment, Goldman Sachs  (GS) - Get Free Report projected that the odds of a US recession are now at 25%, a pullback from the investment bank's March prediction of 35%. 

Though he's still feeling cautious, Goldman Sachs CEO David Solomon told CNBC that he's been "surprised" at the resiliency of the markets throughout the year. 

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"I certainly predicted, given the economic tightening we've seen, a bumpier ride than we've had so far. I still think we're at an uncertain moment," Solomon said. "While our economists again reduced their view on the chance of a recession, I just think it's a period to be a little cautious. I think we could muddle through here with a much softer landing than we could have expected."

Solomon said, though, that there could still be an environment, specifically for business owners, of slow growth and "sticky" inflation, which could "feel like a recession" without technically being one. 

Solomon said that investors should be prepared for the possibility that the Fed continues its rate hikes. 

"I'm not a good predictor of where interest rates will go. But I do think, given what's going on, the way we've tightened economic conditions, we still have stubborn inflation," Solomon said. "There's really a chance that rates go higher, and if they do, that probably is going to make the economic environment a little bit more challenging."

Citing consumer resiliency and employment numbers, Solomon added that there might not be a recession. 

"So far, things have been navigated reasonably well after what was a very disruptive period," he said. "Hard to have a recession with 3.5% unemployment."