Wall Street Leaders Warn in Succession: "A Bigger Shock Awaits the Global Economy"

BlackRock CEO "Supply Issues... Inflation to Persist for Years"
Goldman Sachs President "Global Economy Could Fracture Due to Multiple Adverse Factors"

Larry Fink, Chairman of BlackRock
Photo by Reuters Yonhap News

[Asia Economy Reporter Park Byung-hee] Warnings from Wall Street leaders about a major shock hitting the global economy are coming one after another. Multiple adverse factors such as soaring inflation, the war between Russia and Ukraine, and central banks' monetary policy tightening are overlapping, pointing to the global economy facing enormous uncertainty.

Larry Fink, Chairman and CEO of BlackRock, the world's largest asset management firm, predicted that inflation will continue for several years due to global supply chain instability. On the 2nd (local time), Fink appeared on Bloomberg Television's "The Close" program and said, "The situation has worsened due to COVID-19 and lockdowns in various parts of the world," adding, "The situation is deteriorating further because of supply issues."

Fink also expressed doubts about whether the U.S. central bank, the Federal Reserve (Fed), can adequately respond to the worsening inflation situation. He said, "The Fed does not have the tools to solve supply problems across the economy," and predicted, "Market volatility will continue." He added, "As the economy transitions to eco-friendly energy sources, inflationary pressures will persist."

Fink has repeatedly warned about inflation risks recently. Earlier in March, he pointed out that the Ukraine war had intensified inflation. At that time, he said, "The Ukraine war has brought significant changes to the global economy," and "Companies and governments need to spend more to reconsider their dependence on overseas markets and strengthen domestic capabilities."

John Waldron, President and Chief Operating Officer (COO) of Goldman Sachs

John Waldron, President and Chief Operating Officer (COO) of Goldman Sachs, also warned of the risk of a chain reaction shock that could shake the global economy at a banking conference that day.

Waldron first described the current economic situation as more complex and volatile than anything he had seen in his career. He said, "There has never been a precedent where multiple adverse factors simultaneously impact the economy," adding, "The combination of rising prices, a shift to monetary policy tightening, and Russia's invasion of Ukraine could cause the global economy to rupture."

Both Fink and Waldron warned that the outlook remains bleak. Fink said, "We will face several terrifying situations that will cause more market turmoil." Waldron said, "We expect more economically difficult times ahead," adding, "There is no doubt that the capital market environment will also become more challenging."

These warnings follow remarks by Jamie Dimon, Chairman of JPMorgan Chase, the largest U.S. bank, who said a hurricane is approaching the global economy the day before. At a financial conference held in New York, Dimon recalled his statement from last April about dark clouds on the distant horizon and said, "I will change that statement. It is a hurricane."

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