Billionaire investor David Rubenstein predicts stubborn inflation and warns recession fears can freeze markets. Here are his 6 best quotes from a new interview.

• David Rubenstein predicted stubborn inflation and warned recession fears can freeze markets.
• The Carlyle billionaire forecasted a rebound in dealmaking after a muted year in 2022.
• Rubenstein touted the private equity’s industry track record and global growth opportunities.

David Rubenstein has cast doubt on a full inflation reset, flagged a key downside of recession worries, and predicted a rebound in dealmaking this year.

The billionaire investor and Carlyle cofounder also forecast superior returns in private markets than public ones, and underlined the global growth opportunities for private equity. He weighed in during a recent episode of the “Exchanges at Goldman Sachs” podcast.

Here are Rubenstein’s 6 best quotes, lightly edited for length and clarity:

1. “People are probably willing to accept 3% as acceptable, given where we’ve been recently. I suspect 3% will probably be the norm for some time. Trying to get to 2% and getting there quickly, you’re going to almost certainly get a very high unemployment rate.” (He was discussing the outlook for inflation, which spiked to over 9% last summer and remained north of 6% in December, well above the Federal Reserve’s 2% target.)

2. “When you don’t know if you’re going into a recession or not, it tends to freeze markets. Buyers are afraid of buying into a recession, and sellers don’t want to be seen as giving something away. There’s a big gap in what they feel the value of an asset is.”

3. “As it becomes clearer that we’re not going into a deep recession, and as interest rates decrease or don’t go up quite as much as they did in 2022, I suspect you’ll see more and more deal activity. Last year was a relatively modest year for deal activity. I suspect 2023 will be better.”

4. “From the time I first got into the industry in 1987, when I helped to start Carlyle, people have said: ‘There’s too much money in private equity. The prices we’re paying are too high. The returns aren’t going to be as great as people projected.’ They’ve been wrong almost every year.”

5. “Almost every year for the last 30 years or so, private equity has outperformed public-market indexes, by anywhere from 200 to 500 basis points on average. I suspect that will continue, and it will happen in part because the economic incentives are incredible. You get 20% of the profits on somebody else’s money if you do well, above a minimum return in some cases. As a result, I think people are highly motivated to do well, and they’re very careful.”

6. “I don’t really worry that there’s too much money chasing too few deals. Remember, two-thirds of all the private-equity deals are done in Western Europe and the United States. The largest part of the population of the world still has relatively modest penetration of private equity. (Rubenstein pointed to China, India, Latin America, Africa, and especially the Middle East as attractive growth markets for private equity.)

Read more: David Rubenstein views Warren Buffett as the ultimate investor. The Carlyle billionaire outlines the 12 traits and habits that are critical to Buffett’s success.