GS Layoffs

Goldman is now planning another round of layoffs, according to people familiar with the matter.

The Wall Street giant will cut jobs with a focus on lower performers, according to people familiar with the matter. Goldman employees on Tuesday received a memo signed by the firm’s top brass including Solomon that the firm “will constrain head count growth through the end of the year” and that it will conduct “a limited reduction in roles across the firm.”

Employers are remaining pretty cautious because no one knows what will happen in the next couple months. We're in both a highly speculative and highly propped up economy. American consumers are struggling heavily, and consumer debt delinquency just hit its highest point since 2020. Americans are feeling the squeeze, and the shutdown is only making things worse. 

For some time, we've been in a "low hire, low fire" economy. Despite headline layoffs, as a whole this labor market has remained very steady for those in employment. That's reflected in the unemployment numbers. But we're also in a low hiring state, and this is reflected in the time it takes to get a job being very very high. 

So, right now we're stuck. And right now, there are a lot of potential catalysts that could lead this economy to being a low hire, lots of fire economy-aka a recession. What are those? Well, here are some I can list off the top of my head

• The governmental shutdown and subsequent lack of pay could lead government employees to cut back spending, causing a spiral in consumer spending and leading to firings
• Ai bubble could pop, leading to 401k's being decimated and funds cutting back on hiring and spending. Also, large corporations would cut back on investments into Ai, causing less money in the system and more layoffs
• Massive governmental debt loads could lead to one major economy(Japan and France seem most likely at this point) defaulting or hyperinflating, causing a debt default spiral, as those holding these bonds will take massive losses and default themselves
• Private credit could take massive losses on middle market private equity and end up taking massive losses, leading to defaults that cause wide spread losses and cut backs
• Tariffs and the trade war drive American consumers towards pure essential purchasing. Despite what last quarters consumer spending said about an uptick, almost all of this was in essential items, not luxury goods. That could lead to slow declines, and eventually the American consumer buckles

Those are just a few, I'm sure there are more. It's likely that there will be some sort of negative reverberation because of at least one of these things, and right now we don't exactly have the best leadership to right the ship if something bad does happen. So, companies are rushing to safety. They're shoring up their balance sheets, and getting ready for if something really bad happens. And when you put the layoffs in the broader context of the US economy, they make perfect sense for GS. 

Prob AI related unfortunately. Need less people for same work output.

No worries. Bank of America will scoop up all the underperformers as always and pay them two year guarantees while paying their existing top performers rat shit.

Is this part of a standard underperformance cull, or something out of the ordinary? 

If the former, this is not surprising. IB is a competitive field and a up or out model. There is very little natural churn in the job market right now, so you need to actively cull in order to keep headcount at an appropriate level (assuming you recruit new analysts & associates every year). Plus in my experience, the bottom 5% or so of a class is not capable of doing the job anyways.

Otherwise you end up like BofA, paying everyone peanuts due to an refusal to cull and pushing high performers out. 

Bump 

Doesn’t sound like this is front office focused from the announcement unless I’m missing something. BB in general appear to be net hiring vs net firing, 2026 pipelines are strong.