Goldman Sachs Chief Predicts Economic Shocks as US Deficit Reaches $1.9 Trillion
New York, Tuesday, 17 February 2026.
CEO David Solomon warns of inevitable shocks as the deficit hits $1.9 trillion, noting interest payments now exceed $1 trillion annually, signaling a looming fiscal reckoning.
A Warning on Fiscal Sustainability
Goldman Sachs CEO David Solomon has issued a stark alert regarding the trajectory of the United States economy, emphasizing that the nation faces inevitable “speed bumps or shocks” if the federal government fails to address its ballooning deficit or significantly accelerate economic growth [1]. This warning comes on the heels of updated data from the Congressional Budget Office (CBO) released on February 10, 2026, which projects a federal deficit of $1.9 trillion for the current fiscal year [1][8]. According to Solomon, while the U.S. benefits from the dollar’s status as the world’s reserve currency, this “latitude” is not infinite, and a failure to restructure finances could force a painful readjustment of economic behavior [1].
Projections of Historic Debt Levels
The fiscal outlook presented by the CBO outlines a path where debt fundamentally outpaces economic output. Under the current baseline forecast, federal debt held by the public is expected to rise from 101% of U.S. GDP at the end of 2026 to 108% by 2030 [1]. This trajectory would see the U.S. surpass its previous record debt-to-GDP ratio of 106%, set in 1946 in the immediate aftermath of World War II [1]. By 2036, the debt is projected to reach 120% of GDP, continuing to climb in subsequent decades [1]. The CBO further estimates that annual deficits will average $2.4 trillion between 2027 and 2036, signaling a structural imbalance rather than a temporary anomaly [1].
Market Implications and Future Solvency
The financial sector is already bracing for the potential fallout of these fiscal conditions. Solomon has previously forecasted a potential 10% to 20% drawdown in equity markets within the next 12 to 24 months, citing the need for a “reckoning” if the current course persists [4]. Recent market activity reflects this volatility; despite the S&P 500 trading just 1.5% below its record high, 115 stocks within the index fell 7% or more in single sessions between February 5 and February 15, 2026 [7]. Additionally, U.S. margin debt has climbed to a record $1.23 trillion, suggesting that leverage in the system remains high even as macro risks mount [7].