(Bloomberg) --
The chances that the U.S. economy skids into a recession are “not significant” in the near term as American households extend the expansion and trade tensions appear to be easing, the chief executive of Goldman Sachs Group Inc said in an interview.
“I've said that I still think the chance of a U.S. recession between now and the election is small -- in the distributions of outcomes, it's a smaller outcome -- I said roughly 25%,” CEO David Solomon told Bloomberg Television in Berlin on Tuesday.
“Nine months ago I probably would have told you it was very small, kind of 15%,” he said. “So I do think the uncertainty has increased a little bit some of the risk,” but economic data and earnings momentum have held up well and American consumers are “still very healthy,” he said.
The nation's factory sector isn't faring as well, Solomon said. “There's no question, the industrial, the manufacturing part of the economy is slower, but when you look at the whole package, I think the chance of a recession in the near term is not significant,” he said.
Given the overall strength, the economy may not warrant more interest-rate cuts by the Federal Reserve, Solomon said. “When you look at the economic data, I'd be surprised if rates push lower from here based on the current set of economic data we have."
One source of uncertainty -- the U.S. trade war with China -- is showing signs of easing.
“If you're watching what's coming out of the administration in Washington, if you are listening what's coming out of China, I think it feels like both are incentivized to have some sort of a phase one deal, so there looks like some progress, some movement forward,” Solomon said. “It fells like we're going to have something constructive happen."
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To contact the reporter on this story: Matthew Miller in Berlin at mtmiller@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brendan Murray, Zoe Schneeweiss
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