Speaking at Semafor’s World Economy event in Washington, D.C., President and COO of Goldman Sachs John Waldron warned that some managers have oversold how easy it is to get money out—especially to retail investors, who’ve helped balloon the market into a $1.7 trillion behemoth just as the space faces growing scrutiny and tighter conditions, according to Semafor.

“Not everybody has marketed their product as clearly as, certainly we would like to see with the clarity that this is really not a liquid product. It’s not semi-liquid. It’s really illiquid,” Waldron said.

“Those retail investors, I think, have the perception of more liquidity than is the reality.”

That mismatch matters more now. Private credit has been under pressure lately—from higher rates to jittery investors suddenly remembering they might want their cash back.

Semafor writes that Waldron isn’t predicting imminent trouble unless the broader economy cracks.

“This is an economy that has been predicted to be in trouble for a long time and shows extraordinary resilience,” he said.

“I still see that resilience.” He added, “This economy is much stronger than the narrative suggests.”

He said recent earnings don’t show “any real evidence” of serious weakness, and for now, “confidence is still pretty good,” though prolonged geopolitical tensions—like the ongoing conflict involving Iran—could start to erode that. If oil spikes and key routes like the Strait of Hormuz are disrupted, “you’re going to start to see demand destruction,” he warned.

The bigger watchpoint: liquidity.

Retail investors now make up roughly a fifth of the U.S. private credit market, drawn in by lower minimums—but not necessarily easy exits. Many of these funds cap withdrawals at around 5% per period.

“In situations where there’s a sense that there’s undercurrents of trouble in private credit, you could have more redemption pressure where people want their money back and their gates are going up because that’s the way the system works,” he concluded.