Tesla CEO and billionaire Elon Musk said in an interview with Bloomberg that the US economy would likely face a recession in the short term. His remarks echoed the concerns expressed by several other major business leaders and financial institutions following the recent larger than expected rise in key Federal Reserve interest rates.
- When asked to respond to President Joe Biden’s assertion that a recession is not inevitable, Elon Musk said at the Qatar Economic Forum that a recession was “inevitable at some point”. .
- The billionaire said that, although it is not a certainty, it is “more likely than not” that a recession will occur in the short term, without however giving a precise timetable.
- Earlier, in an internal email to Tesla executives, Elon Musk said he had a “very bad feeling” about the economy and called for layoffs at the company.
- Asked about layoffs at Tesla, he said the company plans to cut its salaried workforce by 10% over the next three months, and increase the non-salaried workforce working hourly.
- In total, Elon Musk said he expected about 3% of Tesla’s overall workforce to be laid off.
76.1%. The percentage of CEOs who believe they are currently facing a recession or will face one by the end of 2023 in their industry, according to a survey by the research group on Conference Board companies. The survey in question was carried out in May, several weeks before the sharp hike in interest rates by the Federal Reserve, which had then heightened fears of a recession.
Besides Elon Musk, several other top business leaders in the United States have raised concerns about the possibility of a recession. Speaking two days before the Federal Reserve’s interest rate hike, James Gorman, CEO of Morgan Stanley, said the odds of a recession were “50-50”, down from 30% previously. He said, however, that a “deep or long recession” was unlikely. Earlier this month, without explicitly mentioning a recession, JP Morgan CEO Jamie Dimon warned of an economic “hurricane” fueled by war in Ukraine and high inflation. He said his bank was preparing for “poor results”. Similarly, Charles Scharf, CEO of Wells Fargo, said in May that it would be “difficult to avoid some form of recession,” but he did not expect it to be a deep recession. Last week, the Federal Reserve raised interest rates by 75 basis points to a target range of 1.5% to 1.75%, its biggest hike in 28 years. The move came after Labor Department data showed consumer prices in the United States hit their highest level in 40 years, with annual inflation jumping to 8.6% in May.
Elon Musk, who recently spoke about his political realignment from Democrat to Republican, said in the interview that he plans to spend a “significant” amount of around $25 million to fund an action committee. politics in the 2024 presidential elections. The billionaire, however, remained evasive about supporting Donald Trump’s candidacy, saying he was “undecided at this stage”.
Article translated from Forbes US – Author: Siladitya Ray
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