NEW YORK, Jan. 15 (Xinhua) -- The United States is facing high inflation and increasing debt, and the economy is in a fragile place, according to David Soloman, the chief executive officer (CEO) of Goldman Sachs.
U.S. consumers were still powering the economy last year. But they have really felt that inflation is "extraordinarily punitive," Soloman said Tuesday at NRF 2025: Retail's Big Show, a yearly expo organized by the U.S. National Retail Federation (NRF).
Progress has been made especially with durables. But services inflation remains high, he said.
"Food is something consumers really feel. So when you look at the balance, and you don't have the capacity, certainly, to spend away," Soloman added.
Fueled by strong non-farm payroll growth in December, the 10-year U.S. Treasury yield recently reached its highest level in 14 months. Combined with stubborn inflation, it is believed that these headwinds significantly reduced the chance of the Federal Reserve cutting rates in the coming months.
Soloman offered a different take, noting that he did not see the Fed "is going to be much more hawkish." But he did hold the view that U.S. inflation could be much stickier.
The consumer price index for December 2024, which is scheduled to be released on Wednesday, would grow 2.9 percent year on year, up from 2.7 percent in the previous month, according to the consensus forecast in the market.
Soloman noted that it is important to really get spending and deficit levels under control.
He stressed the importance of labor growth in bolstering economic expansion and easing inflation.
"Labor growth is important. We obviously have policy decisions made around immigration. We need immigration. We need labor growth," he said.
Soloman expressed his concern that the hard border policy pursued by the incoming federal administration could hurt labor force growth.
"It's very, very important that we have secure borders. But when you think about deportations and what's taken, it's very, very important that we balance all that with continuing immigration growth," said Soloman.
The tense geopolitical situation that may emerge with the incoming administration will bring about further changes of multilateral relations around the world, affecting the development of globalization, said Soloman. ■