Goldman Sachs could cut as many as 1,800 jobs as part of its annual review.
The banking giant is likely to shed three to four percent of its staff. This is as part of the routine annual review process, which is carried out once a year. The process is standard practice for managing talent and costs.
Impact Across Various Divisions
The layoffs have already begun. They are expected to affect multiple divisions within the bank. The move aligns with the bank’s customary approach to trimming underperforming staff during its yearly talent review.
Spokesperson’s Comments
Tony Fratto, a spokesperson for Goldman Sachs, described the process as “normal, standard, and customary.” He stressed the annual reviews are an integral part of the bank’s operational strategy. Despite the planned reductions, Fratto said Goldman Sachs anticipates an overall increase in headcount by the end of 2024, compared to the previous year.
Common Practice Among Major Banks
Such workforce adjustments are not unique to Goldman Sachs. Major banks frequently implement similar measures to manage expenses in a challenging economic landscape. In the first quarter of this year alone, the largest US banks collectively reduced over 5,000 positions, with Citigroup leading the cuts by eliminating 2,000 jobs.
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Historical Context of Goldman Sachs Layoffs
Historically, Goldman Sachs’ annual review process has resulted in workforce reductions ranging from 2% to 7%, depending on financial performance and market conditions. Last year, the bank implemented a 6% reduction in January, followed by additional layoffs in May and the autumn.
Economic Outlook and Recession Probability
In a related development, the company recently adjusted its outlook on the US economy, lowering the probability of a recession from 25% to 20%. The bank cited positive retail sales figures and improving unemployment claims data as key factors in this revision.
Goldman Sachs economists also suggest that an upcoming strong jobs report, expected on September 6, could reduce the recession risk further to 15%, bringing it back to the level seen before the recent revision.
