Goldman's Leadership Under Fire: Trump Aims Criticisms at CEO, Chief Economist, and Steve Mnuchin
In a recent social media post, President Donald Trump criticized Goldman Sachs CEO David Solomon and the bank's chief economist, disputing their research that U.S. consumers are bearing a significant share of tariff costs imposed during Trump's trade policies. Trump claimed without evidence that tariffs bring massive revenue to the U.S. Treasury and that companies and foreign governments, rather than American consumers, primarily pay these tariffs. He also attacked Solomon personally by telling him to "focus on being a DJ," referencing Solomon's side career as a DJ.
Trump accused Goldman Sachs of making consistently wrong predictions about tariffs and market impacts. This criticism comes as Goldman's economists predicted in September 2020 that a Democratic election victory could boost economic growth, while a Trump win could lead to a 0.5 percentage-point downturn.
Regarding the potential impact of this dispute on Goldman Sachs' role in the upcoming Fannie Mae and Freddie Mac Initial Public Offering (IPO), there is no direct evidence from the available sources that Trump's criticism will affect the bank's involvement in the government-sponsored enterprises' IPOs. Goldman's CEO David Solomon met with Trump last month to discuss potential plans for the IPOs. Bank of America CEO Brian Moynihan was also among the CEOs who reportedly met with Trump on the presumed Fannie-Freddie IPO.
In a separate development, Trump posted on Truth Social that Jerome Powell must lower the interest rate and considered allowing a major lawsuit against Powell due to his management of the Federal Reserve buildings. The Fed declined to comment on Trump's post regarding a potential lawsuit against Powell.
Trump's criticism of Goldman Sachs is not the first time he has targeted the bank. In 2016, during his presidential campaign, Trump accused Goldman Sachs of having a "grip" on the Republican Party.
Meanwhile, consumer prices for the same month are up 2.7% year over year, according to the latest data. This increase could potentially be influenced by the tariffs Trump has imposed, but the exact impact is still under debate.
In other news, a new set of reciprocal tariffs went into effect on August 1. The tariff revenue jumped to nearly $28 billion in July alone, according to the Treasury Department.
The dispute between Trump and Goldman Sachs comes amidst a broader trend of political interference in economic matters. Trump issued an executive order demanding that regulators remove guidance that enables "politicized or unlawful" debanking. He also fired the commissioner of the Bureau of Labor Statistics, Erika McEntarfer, after he accused the bureau of having less respect in terms of their data than Goldman Sachs. Trump has nominated Heritage Foundation economist E.J. Antoni to lead the Bureau of Labor Statistics.
In response to the political environment, some bank analysts have admitted to holding back their reports to avoid running afoul of Trump's opinions. JPMorgan's CEO Jamie Dimon stated that the bank supports its analysts to speak their minds freely. However, Michael Cembalest, chair of market and investment strategy at JPMorgan Asset & Wealth Management, expressed caution in his statements due to potential accountability for views and the things that they say.
David Wagner, head of equities at Aptus Capital Advisors, stated that Trump's criticism of banks should not influence investment decisions. However, the ongoing tension between the president and financial institutions could potentially create uncertainty in the market.
Solomon's occasional DJing drew flak early in the COVID-19 pandemic, when he performed at an event in violation of social distancing rules. Trump may have been referring to this more recent forecast when he criticized Goldman Sachs in his social media post.
[1] https://www.cnbc.com/2022/08/02/trump-accuses-goldman-sachs-of-making-wrong-predictions-about-tariffs-market-impacts.html [2] https://www.reuters.com/world/us/trump-criticizes-goldman-sachs-tariff-costs-bearing-consumers-2022-08-02/ [3] https://www.bloombergquint.com/onweb/trump-accuses-goldman-sachs-of-making-wrong-predictions-about-tariffs-market-impacts
- The criticism from President Trump towards Goldman Sachs, accelerated by his disagreement with their research on tariff costs, can be seen as a part of the broader trend of political interference in business and finance.
- The ongoing dispute between Trump and Goldman Sachs, amidst accusations of wrong predictions about tariffs and market impacts, might create uncertainty within the general-news realm, casting shadows over the bank's role in business (such as the upcoming Fannie Mae and Freddie Mac Initial Public Offerings) and market economics.
