Historically, the US has had “the crisis of the century” once every four to five years, Blankfein told CNBC on Thursday<\/a>, pointing to the quick succession of crises in the 1990s and early 2000s, like the sovereign debt crisis<\/a>, the bursting of the dot-com bubble<\/a>, and the subprime mortgage crisis<\/a>.<\/p>\n “There’s a lot of 1% risks, but it’s not a 1% risk that something bad will happen,” Blankfein said. “I’m saying we’re due. And it doesn’t matter you can’t see where it’s coming from.”<\/p>\n Most people’s base case doesn’t involve a full-blown\u00a0financial crisis<\/a>, with stocks at all-time highs and the economy remaining generally resilient despite pockets of weakness.<\/p>\n But there’s one clue as to where the economy’s next big problem could arise, in Blankfein’s view: credit markets.<\/p>\n “It usually revolves around leverage<\/a>. And, in this time, now, probably credit \u2014 leverage in places that you don’t see it,” he said of the potential for another big market event.<\/p>\n Here are some of the warning signs Blankfein said he saw in the credit space:<\/p>\n Related stories<\/p>\n Business Insider tells the innovative stories you want to know<\/p>\n Business Insider tells the innovative stories you want to know<\/p>\n Credit spreads<\/a> are historically narrow. Spreads refer to the yield paid over a benchmark like Treasurys. “Narrow” spreads mean that investors perceive less risk in the market, while “wider” spreads indicate investors want to be compensated more for higher perceived risk.<\/p>\n Similar to warnings of complacency when the stock market is at record highs, some market pros think that historically narrow credit spreads could be a warning that investors are mispricing risk, given recent signs of weakness in certain industries and in the broader economy.<\/p>\n The ICE Bank of America US High Yield Index Option-Adjusted Spread hovered near 2.84% in the last week, near a historic low.<\/p>\n<\/p>\n Money flowing into private credit. Private credit, which refers to investors lending to private companies, has been having a big moment in recent years. That’s partly because private corporate loans tend to come with higher yields.<\/p>\n Assets under management in private credit is growing a 14.5% year-over-year pace, according to data cited in one JPMorgan Private Bank report<\/a>.<\/p>\n “People trying to, you know, goose their returns a little bit by leveraging up in kind of odd ways,” Blankfein said, later pointing to the the investment activities of some insurers that have been active in the private credit space.<\/p>\n “Leverage starts to sink in. I think of the places where this is being done,” he added. “If I were an insurance regulator at some point, I might say, are those assets really worth what you say they’re worth?”<\/p>\n Still, Blankfein said he remained bullish on markets and the US economy overall.<\/p>\n That’s partly because the Fed looks poised to lower interest rates, a move that could propel stocks further into bull market<\/a> territory.<\/p>\n The investing environment also looks “phenomenal,” he said, referring to excitement around AI<\/a> and its potential to boost growth in the US.<\/p>\n “I have all these bearish thoughts, but I’m still 100% in on equities,” he said. “I’ve lived through waves of technology and experienced things that changed the world. And I experienced things that changed our fortunes because we overinvested in stuff.”<\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/08\/1754989098_269_placeholder.png\")
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