Why Goldman Sachs CEO David Solomon Is Optimistic About the U.S. Economy | | | | | BY AYESHA JAVED
Senior Editor, TIME |
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| Goldman Sachs CEO David Solomon spoke to TIME in December 2025 about the economic outlook for 2026, whether we're in an AI bubble, and what the technology's implementation could mean for jobs. | This interview has been condensed and edited for clarity. | What are your expectations for the economy in the year ahead? | There are a handful of structural tailwinds that we've experienced for a portion of 2025 that set [us] up into 2026. First, the U.S. is running a pretty aggressive fiscal play, and the big bill that was passed during the summer has a bunch of fiscally stimulative actions that take effect in 2026. Second, the ramp-up in capital spending around AI infrastructure is continuing at a pace that's having a real impact on GDP growth. In 2025 it accounted for over a percent of GDP. The four largest hyperscalers spent up to $400 billion and that's going to continue in 2026, and that creates a good tailwind. | This Administration is certainly trying to swing the pendulum around regulatory activity, around business. We have been in an interest-rate-cutting cycle. You can hear in the Administration's narrative, there's a bit of a pivot to a focus on affordability as they head into the midterm elections. You're seeing that in some backing off on some of the tariff policies, and in some fiscal support, like the farm aid [package]. | In Europe, you have slower trend growth, and you've got an enormous regulatory burden from the E.U. And while China is certainly very active, and you see this enormous manufacturing surplus [and] lots of government subsidization, the consumer economy and the overall economic activity there are still soft, even though markets are off their bottoms. When you put that all together, it's relatively constructive. | Are there any economic pain points that you're particularly concerned about or that you think need to be urgently addressed? | Inflation has been stickier, and that's a pain point for consumers. It's a pain point for everyday people in most economies. I think that more clarity around trade policy and trade deals is helpful because it creates more certainty and allows for greater capital flows and capital investment if people understand the trade landscape. That's still in flux, although hopefully that's clarifying as we look into 2026 and geopolitics are complicated at the moment, and that complexity is a little bit of a headwind to growth. I do think we've had a significant de-escalation in the U.S.-China relationship, and I would expect in 2026 it will be de-escalated, or more constructive. There's a reasonable chance we could get some sort of a trade deal. There's clearly a roadmap for interactions between President Xi and President Trump, and so that's a more constructive environment than what we have in 2025. | How are you navigating headwinds like trade tensions and geopolitical instability? | When there's uncertainty in the world, from a geo-political perspective, it creates more risk. It certainly gives people a little bit more pause. But when you look at technology, innovation, growth, and what's going on broadly in the economy, the economy is kind of parking that on the side. Market participants worry about those things. But they're not letting them overshadow a lot of the more constructive things that are going on in the economy at the moment. | There's been a lot of talk about whether we're in an AI bubble. How are you thinking about that? | I'm incredibly bullish about the technology and [its] impact as it gets deployed and how it can create productivity gains in business and large and small enterprise. If you step back and you say, over the next five to 10 years, how is this going to affect the economy, it's hugely constructive, and the productivity gains are going to be enormous. In the short term, people are quite forward on capital formation and valuations, and they're assuming a level of growth and uptake. And it may not go at the pace people expect. That can change valuations and create market volatility. | When you have markets assuming the growth and investment that we're seeing here, there'll be periods of recalibration. And when there's recalibration, you can see resetting relative valuations and drawdowns. But that's not a bubble. I'd also say that the pace of change is really quick, and, particularly as this technology gets embedded in enterprise and affects jobs and hiring patterns, that's going to be something we have to manage. | You've seen a number of cycles in your career, and you've said before there are winners and losers. What factors do you think determine whether you're a winner? | Winners are companies that, over long periods of time, perform better on a relative basis than people they're competing with in their space. And I don't mean to overly simplify it, but building a company that can sustainably produce better returns and deliver better products and services on a relative basis against people they compete with is hard. All sorts of factors impact that, from management, strategic decisions, markets, products. I'm not smart enough to call balls and strikes in a new technology expansion, as to who's going to win and who's going to lose. And I've been around long enough to know that the pundits are generally not good at picking winners and losers. They emerge over time. And by the way, even with established companies, they ebb and flow over time. | There are a variety of different reasons why companies make good decisions and outperform, and it's no different here with AI technology and these new companies. It's very early though, to declare. I would say that the big hyperscalers like Microsoft, Google, Meta, Amazon, they've got enormous advantages, based on their scale and their platforms and the way they connect with both enterprises and individual consumers. I think they're going to be players in this for sure. | How are you implementing AI at Goldman Sachs? | There are two things that we're really focused on, the first is we have a very, very productive workforce. We have super smart, highly skilled people that interact with our clients, and we have been very good, over a long period of time, at giving them the best technology, tools, and the best applications to help make them more productive. The first thing with large language models is getting these models into the hands of our highly productive people and giving them tools and applications that allow them to accelerate their workflows and be more productive. It's something we've done with lots of technologies, and we're doing it here. | The more complicated thing, and I'm finding, as I'm talking to CEOs, lots of CEOs are focused on this is: How do you take this technology and embed it in the enterprise to reimagine processes that with this technology can now be done differently than they've historically been done, and through the embedding of that technology or the re-imagination of these processes, you can create enormous operating efficiencies. You can basically do things in different ways, often with fundamentally less people. And it's not just that that creates more margin accretion. It actually frees up capacity to invest in things that you want to invest in to grow the business where you've been more constrained. So I think about Goldman Sachs—we have to produce certain returns. If our returns are lower, it affects how our stock trades. So we've always gone into every year with a list of things we've wanted to do that we couldn't afford to invest in growth. And if we can use this technology and deploy it in the enterprise and create more efficiency and free up more capacity to invest, it actually allows us to invest in growth, and therefore grow our earnings more quickly. And also, if we have an ability, to some degree, to constrain our headcount growth, to be more productive, that also has an impact on earnings growth. | One of the things that's going on at the moment is you see markets gravitating to higher multiples, because I think the market's looking ahead and saying, most enterprises are going to find ways to drive more productivity in their business, and that should be good for earnings growth. And I think the market's embracing that at the moment. | Will AI implementation result in shrinking workforces? | This has to be seen through a lens of time. Do I think that we're going to have a structurally different full employment level in the U.S. 10 years from now than we do now? No. But in the transition, because of the pace of change, could there be periods of time where we have higher structural unemployment in certain businesses or in certain types of job functions? Yes, but we have a very nimble, very, very diverse economy. [In the U.S.], our ability to have labor move to different places and to create new industries and new jobs continues ... Our economy is big [and] resilient. People gravitate to other places where there are opportunities. Workforce and work patterns shift. | If you were advising a high schooler about what to study at college, what would you say? | Not everybody should do the same thing. But with all we're doing with AI and AI infrastructure, I think being an electrical engineer, being an electrician, being able to get involved in data centers and that infrastructure, seems super exciting. | Education is a lifelong process. School is obviously a step in that. That doesn't mean it's for everybody. The important thing is to figure out what you're interested in and figure out where you see opportunities, and then you've got to go work hard and try to advance yourself and continue to learn and continue to find ways to contribute. | Productivity gains change the way people work, but we've got a very big, broad, deep, resilient economy, and it's not just all about AI and technology. Technology is very important, but think about what's going on with technical manufacturing. Think about what's going on in an industry like mining, given our need to have more independence around critical minerals and all the jobs and labor and technology that has to go into [it.] There are all sorts of things that continue to change and shift. People need to find their path, and there's no one way. | Goldman has a reputation for hiring the best. There is a lot of competition from the tech sector for the brightest minds. How are you thinking about talent acquisition and retention? | The firm is a super unique talent ecosystem. And we're very proud of the talent we attract to Goldman Sachs. I think it's a differentiator for Goldman Sachs. And we spend a lot of time investing in and thinking about it. Hiring really smart, really talented, really motivated people who strive for excellence, out of school continues to be a hallmark of what we do. We hire 2,000 to 2,500 people at the moment, most years. With these shifts in technology, could there be some downward pressure on that? Yeah, a little bit. But I don't think in the overall scheme of things, enormous. But we have more than 350,000 people applying for those 2,000 to 2,500 jobs—super competitive—and our ability to find really extraordinary and diverse talent all over the world through that process, is something that we continue to invest in very heavily. 50% of the people working Goldman Sachs are in their 20s. It's a very young firm, and a lot of it is [because] we hire these young people out of school. They come into an apprenticeship culture, to learn, to grow, to meet people, to build a network. A small slice of them stay for a long time and build their careers at the firm. Most of them get two, three, five, seven years [of] experience and go off in the world to do other things and always look back favorably on their connection with the firm, and that's been a very good system and process for us. | I think in this world, with this technology, the apprenticeship culture continues to change, but it doesn't go away. I actually think there are opportunities with this technology to make it an even better experience, because it allows a lot of the work that's that's less interesting to be automated, and gives those people that are inside the firm and are trying to learn, an opportunity to spend more time with experienced people to help them really have an opportunity to upskill and learn and more time that can really accelerate their learning curve. And the technology can also accelerate their learning curve, so the apprenticeship culture will adapt, but it's not going to go away. | | You've talked about wanting to make more progress on gender diversity. Is that still a priority for you? How are you thinking about building that pipeline? | We are extremely focused on diversity in our organization, and also making it a very inclusive place to work, that's a core value. There have certainly been changes around the legal structure, how you implement these things, how you focus on this in the United States. But that doesn't change our values. And so our values remain in place. I'd say we've made really strong progress over the last seven years, but we've got more work to do. And these are long term things. We have a very, very detailed leadership pipeline process at the firm where we bring people along to advance and place them in jobs and move people around. It's a core tenant of our talent management processes. And diverse perspectives, diversity in those processes and leadership around the firm continues to be a very important focus. And I've always believed that diversity in a meritocracy can absolutely coexist in a very powerful way. It's a business imperative, and we continue to work hard to make sure we deliver on that. | What lessons have you learned about leadership over the course of your career? | Everybody's leadership style evolves over time. But there are things that I believe in that are foundational to the way I lead. The first is transparency and candor are super important. People want to know where they stand. People want feedback. They want transparency and honesty. They don't want fluff. | I'm also a big believer in change and evolution. I've got a little plaque on my desk that says "Change or die." And I really think when you're a leader in business, if you don't adapt, if you don't change, if you don't have an ethos of constantly watching the way the world's changing—the world's changing very quickly. You've got to constantly evolve. And so I think being open to change is really important to leadership, and part of that is listening to feedback and being willing to change your mind. I think good leaders have an intuitive ability to take input and make decisions and to be decisive, but at the same point, you can be very decisive and then also change your mind and say, "Oops, I was wrong. We're going to do this differently." And I think that's an important characteristic—being willing to say something's not working, so we're going to do it differently. But there are lots of things that matter, and you learn along the way. One of the things that I've certainly experienced is, I've done some things right, but I've done a lot of things wrong, and you've got to be willing to adapt and adjust and own your mistakes, and be willing to pivot, be willing to evolve. It was super important. | Share the Leadership Brief by clicking here. |
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