Musk’s bad sense of impending recession intensifies

By Siladitya Ray

Tesla CEO and billionaire Elon Musk said the US economy is likely to face the spectrum of recession in the near future, in an interview with Bloomberg on Tuesday, echoing concerns voiced by several other top business and financial leaders. following the recent, sharper-than-expected increase in key interest rates by the Federal Reserve.

Speaking at the Qatar Economic Forum, Musk said a recession was “inevitable within a reasonable time frame” when asked to respond to US President Joe Biden’s assertion that a recession in the economy is not legal.

The billionaire noted that, although it is not certain, it is “more likely” to see a recession in the near future, without giving a specific timetable for its forecast.

“Bad feeling” and ominous predictions

Earlier, in an internal email to Tesla executives, Musk had written that he had a “super bad feeling” about the economy, while calling for layoffs in the company.

Asked about the layoffs at Tesla, Musk said the company plans to cut its workforce by 10% over the next three months, but reiterated that the number of hourly workers will increase.

Overall, Musk said he expects about 3% of Tesla’s total workforce to be laid off.

76.1% are the percentage of CEOs who believe they are either facing or will face a recession by the end of 2023 in their geographic area of ​​activity, according to a survey conducted by the Conference Board business research team.

The survey was conducted in May, several weeks before the US Federal Reserve raised interest rates sharply, raising concerns about a negative turnaround in the economy.

In addition to Musk, several other top US business leaders have expressed concern about an impending recession in the country. Speaking two days before the Fed raised interest rates, Morgan Stanley CEO James Gorman put the chances of a recession at “50-50”, compared to his earlier forecast of a 30% chance. Gorman, however, said a “deep or long recession” was unlikely.

Earlier this month, JP Morgan CEO Jamie Damon, without explicitly mentioning a recession, warned of an economic “hurricane” fueled by the war in Ukraine and high inflation. Damon said his bank was preparing for “bad results”.

Similarly, Wells Fargo CEO Charles Scharf said in May that it would be “difficult to prevent some kind of recession”, but did not expect it to be deep. Last week, the Federal Reserve raised interest rates by 75 basis points to a range of 1.5% to 1.75% – the sharpest increase in 28 years. The move comes after the US Department of Labor released data showing consumer prices in the US were hovering around a 40-year high, with annual inflation soaring to 8.6% in May.

Republican

Musk, who recently spoke of his political “transformation” from a Democrat to a Republican, said in an interview that he plans to spend a “not insignificant” amount of about $ 25 million to fund a super PAC (Political Action Committee) in the presidential election. of 2024.

The billionaire, however, remained unbound on any possible support from a Donald Trump nominee, saying he was “undecided on this point.”