The CEO of Tesla and SpaceX is convinced that the economic situation is not about to get better.
The economy is on everyone’s mind.
What concerns everyone is the health of economic activity as the midterm elections loom.
President Joe Biden, whose party has a fragile majority in Congress, continues to say that the situation is not so hopeless.
“We’re starting to see some of the good news on the economy. Gas prices are down sharply in 46 of the 50 states because of what I’ve been doing. We’re moving in the right direction,” Biden said during a press conference on Oct. 20.
He was trying to fend off Republican attacks on the economy and inflation.
The message of the President is in contrast with many business leaders and economists who believe that the policy of aggressive interest rate hikes by the Federal Reserve (Fed) to crush inflation will cause a so-called hard landing of the economy, aka a recession.
Business Leaders Say Recession Is Imminent
Jamie Dimon, CEO of JPMorgan Chase, said, on Oct. 10, that the economy would enter a recession “six to nine months from now.”
“I think it’s a time to be cautious,” Solomon said during an interview with CNBC on Oct. 18. “And I think that if you’re running a risk-based business, it’s a time to think more cautiously about your risk box, your risk appetite. I think you have to expect that there’s more volatility on the horizon.”
The banker added: “Now, that doesn’t mean for sure that we have a really difficult economic scenario, but in the distribution of outcomes, there’s good chance we could have a recession.”
“Yep, the probabilities in this economy tell you to batten down the hatches,” Bezos posted on Twitter on Oct. 18.
Recession Will Last ‘Until the Spring of 2004’
More than two-thirds (69%) of Americans are worried about the possibility of a recession by the end of 2023, according to a July survey by personal finance website Bankrate.com.
Many tech groups have already announced hiring freezes, withdrawn job offers, cut jobs, travel budgets, marketing budgets and employee perks. There are those who have also cancelled certain projects. Tech companies are companies that thrive in times of growth. They are often the first ones impacted by a downturn.
Elon Musk, the richest man in the world and boss of four companies, estimates that the looming recession will last at least until the spring of 2024. For Musk, there is no doubt of an economic decline. And this will continue for at least another 18 months.
It all started with a Twitter thread initiated by Billy Marcus, the co-creator of the meme coin Dogecoin (DOGE), of which Musk is one of the biggest supporters.
“Oh wow coronavirus numbers are actually pretty low,” Marcus posted on Twitter on Oct. 21. “I guess all we have to worry about now is the impending global recession and nuclear apocalypse.”
“It sure would be nice to have one year without a horrible global event,” Musk responded.
It was then that a Twitter user asked him how long he thought the recession would last.
“How long you think the recession will last,” the user asked.
“Just guessing, but probably until spring of ‘24,” the billionaire responded.
How Bad Will It Be?
“How much worse do you think it will get??” the user continued. “Like a little worse or a ton worse?”
According to Musk, it is difficult to say exactly how much the economic situation will deteriorate. But he believes the upside of the recession is that companies that don’t have true fundamentals will die out.
“Varies a lot, ” Musk said. “Tesla & SpaceX are in good positions, but many other companies are not.”
He added: “Recessions do have a silver lining in that companies that shouldn’t exist stop existing.”
This isn’t the first time Musk has predicted the economy will fall into a recession. He has also already warned that “the bullshit companies go bankrupt and the ones that are doing useful products are prosperous.”
“I think we probably are in a recession and that recession will get worse,” the billionaire said on May 16 during a virtual appearance at the recent All-In Conference held in Miami. “But you know, these things pass and then there will be boom times again.”
Tesla, Musk’s flagship company, continues to hire and has no plans to slow down its vehicle production.