(Bloomberg) -- Goldman Sachs Group Inc. Chief Executive Officer David Solomon said he currently expects that the Federal Reserve won’t cut interest rates this year, amid an economy that’s proved more resilient thanks to government spending. 

“I still don’t see the data that’s compelling to see we’re going to cut rates here,” he said from an event hosted by Boston College, adding that he’s currently predicting “zero” cuts. Investments in AI infrastructure have also helped the economy be more resilient to the Fed’s monetary tightening, he said.

Still, the consumer is starting to feel the pinch from higher prices, Solomon said. He pointed to recent earnings reports from McDonald’s Corp. and AutoZone Inc. as evidence that consumers are starting to curb spending.

“If you’re talking to CEOs that are running businesses that really deal with what I’ll call the middle of the American economy, those businesses have been starting to see change in consumer behaviors,” he said. “Inflation is not just nominal. It’s cumulative, and so everything is more expensive. You’re starting to see the consumer, the average American, feel this.”

That change in consumer behavior heightens the risk of a “real and palpable” slowdown compared to six months ago, he said. Solomon also cited geopolitical fragility which he said is something that people are going to have to live with for a long time. 

Read More: For David Solomon, ‘Times Are Good’ for Goldman and Economy

Earlier this month, Solomon said that the economy was “chugging along pretty well” though he had warned in March that inflation was likely to be stickier than markets have anticipated. 

Goldman’s team of economists in April said they expect only two cuts this year, with the first move coming in July followed by another in November. That’s a revision from their earlier predictions — and reflects the broader struggle of analysts to predict the Fed’s path after the first big inflation wave in four decades. 

Goldman’s president John Waldron said there’s much debate within the firm about the pace of cuts, with those who speak to clients erring on the more cautious side. The bank doesn’t have a house view, he said Wednesday at an Investment Company Institute conference in Washington.

“I think a lot of us around the table that are more the practitioner side and are speaking to a lot of clients, CEOs and otherwise, are more circumspect about whether the Fed actually can move that early,” he said. “There just seems to be more inflation in the system.”

European central banks are more likely to make interest rate cuts this year, given the sluggishness and “structural demographic issues” in that economy, Solomon said. The economy in China is “struggling for sure,” he said. “It feels slow and sluggish around the world,” he said.

Office Return

Solomon also discussed the value of returning to pre-pandemic office habits, particularly for younger employees who are still learning the business. About half of the company’s employees are in their 20s, and they “come to the firm for the explicit purpose of learning from other people,” Solomon said. “It doesn’t happen the same way when they’re not coming together.” 

While many corporate leaders have taken public stances on social and political issues in recent years, Solomon said he doesn’t see that as part of his job as Goldman’s CEO. “This has gotten increasingly more complicated,” he said. “You can pick any issue and there’d be lots of Goldman Sachs people on both sides,” he said.

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