But we're going to start here at the G20 Finance Meeting in North Carolina, with Goldman Sachs CEO. He's among the executives joining the finance ministers and central bankers for meetings on the global economy. Joining me now for a CNBC exclusive is David Solomon. It's good to see you here in Asheville.
It's good to be here, and I really appreciate the fact that Treasury has invited a group of people from industry down to participate. It really speaks to the desire to really have a public-private partnership with business to try to drive more economic growth. And so I'm thrilled to be down here. It's beautiful here, and happy to be here.
Yeah. So I mean, that is what the theme is: is growth. So I maybe just wanted to start with your outlook for the U.S. economy right now.
My outlook for the U.S. economy is pretty constructive. We're at a moment, Sara, where generally speaking, the consumer is still pretty resilient. The economy is performing well. We have an enormous investment cycle that's obviously contributing to growth and activity. And the thing I'd highlight that I know you've been focused on is the level of earnings growth has really been extraordinary, and that's been a big tailwind for the market and for the economy. And so, I think things are set up pretty well and are quite constructive. Now, it's not a straight line. There are obviously bumps and headwinds from the situation in the Middle East. I think trade policy and tariffs is also a headwind to some degree. But we work through all of that, and the thing that I'm excited about is if I step back and take a longer lens and start thinking about the next five to 10 years, I think with AI being developed into the economy and the enterprise—and that won't be a straight line either—but the productivity opportunity, the productivity gains, actually gives us a real opportunity to run at a higher growth rate as we move forward.
Do you think that it'll all be worth it? All the investment.
I can't say that every investment will be worth it because, of course, there'll always be winners and losers, some good investments, some bad investments. But the direction of travel, as this gets adopted into the economy and gets adopted with enterprises and with individuals, is a productivity boom that I think is going to be extraordinary, and that gives us a chance, if we manage it well, for a fundamentally higher growth rate, which is important for us as we move forward.
Yeah, I mean, I was actually going to ask you about the bond market and how all these companies are now borrowing, and we're increasingly seeing this as a debt-fueled buildout. If it presents a credit risk.
Well, does it present? Over time, I think it's something to monitor: what is the size of the investment? How much of it is debt financed? I think to make generalizations is tough. At the moment, I don't see a lot of risks in the system. A lot of the credit issuance is coming from very, very large companies that have fundamentally strong underlying cash flow characteristics, and they're choosing to take their earnings from other businesses and invest it in this growth cycle. Are there going to be places where we probably go too far, and will there at some point be recalibration? Absolutely, but we're watching it closely, and I'm not overly concerned at the moment.
Speaking of the bond market, I did want to ask you about the recent Treasury intervention. We talked to Secretary Bessent about it. There was a yen intervention as well. I mean, is it a good thing that we have a more interventionist government, Treasury, in financial markets?
Well, at the end of the day, and you just had the Treasury Secretary on, I took a quick look at his comments. These are actions that Treasury takes from time to time. I'd really step back and try to think about this in a bigger context. The movement of Treasuries, of term Treasury premium higher, has been a long-term trend that's been driven by our fiscal spending policy, by an economy that's had more embedded inflation recently, and also by levels of higher growth. Ultimately, those actions send signals, and in some cases, when I think about Japan, for example, it signals a commitment. It's not that necessarily it changes the overall trajectory. Markets are very, very efficient. These are the biggest markets in the world, and they're going to move to their set levels. But this is a longer-term trend that's reflective of our fiscal decisions, the growth of the debt overall, and the overall state of the economy. I'd also highlight that it's hard to fight that. But I'd also say having a 5% term Treasury premium isn't a calamity. And by the way, if you have any kind of a historical context, Treasury premiums can be higher, and it's not a calamity. It's really about what kind of growth can we drive in the economy, and what is our fiscal policy decisions going to be on a go-forward basis. And those are things that I think we're going to have to wrestle with a lot more.
When does it become a calamity?
I think the chance of it becoming a calamity, I don't think it works that way. I think markets will adjust, our behavior will adjust, but we are going to have to adjust. We are either going to have to drive higher levels of economic growth consistently, given our levels of spending and debt, or we're going to have to adjust our spending policy. And I think the pressure on us over time will grow if we don't get that balance right.
Yeah. At the same time, you have a Fed that I mean, we think is increasingly talking hawkish, although it's hard to tell. Not a lot of forward guidance out of Fed Chairman Warsh. Do you think it would be the right move to raise rates right now?
