Solomon says inflation is Goldman Sachs' bigger near-term concern

At Goldman Sachs, the next few quarters may be shaped less by the unemployment rate than by whether inflation flares back up, a stance that could filter down into hiring, bonus pools and spending plans across the firm. David Solomon said consumer behavior could change in the second half of 2026 if inflation picks up, pointing to higher oil prices as the key trigger.

That matters because the macro backdrop is still unsettled. A St. Louis Fed analysis published March 3 said the Federal Reserve’s twin goals of stable prices and maximum employment appeared to be in conflict. The same analysis said U.S. unemployment reached 4.3% in January 2026, up from 3.4% in April 2023, while 2025 PCE inflation came in at 2.9%, still above the Fed’s 2% target. In plain English, price pressures remain sticky enough that rate policy is unlikely to turn decisively friendlier for borrowers, dealmakers or employers just yet.

Solomon’s comments fit the way Goldman’s top brass has been talking this year. John Waldron, Goldman Sachs’ chief operating officer, called inflation “the single biggest risk element” to the economy at Bernstein’s Strategic Decisions Conference in New York on May 28. Goldman Sachs Research also warned in May that higher oil prices tied to Middle East disruptions were already hitting U.S. consumer spending and low-income households, a reminder that energy shocks can reach Main Street quickly.

For Goldman employees, an inflation-first mindset usually translates into caution rather than drama. If management is more worried about prices than job losses, that tends to favor tighter headcount management, slower approval of discretionary projects and more scrutiny of compensation growth when margins come under pressure. Bonus conversations can become harder, not because business has collapsed, but because leadership wants to preserve flexibility if costs rise or the consumer weakens.

Solomon has also been playing down the idea that artificial intelligence will trigger a broad “job apocalypse,” suggesting he sees labor-market weakness as a longer-term and less urgent risk than inflation. Bloomberg reported that he told an Economic Club of New York audience there was “more greed than fear” in markets, underscoring his view that risk appetite remains strong even with inflation still in the background. For Goldman’s bankers and deal staff, that combination points to a firm that is still looking for opportunities, but planning around a more expensive and less forgiving economy.