By Bryan Jung
Elon Musk, the founder and CEO of Tesla and SpaceX, predicted a global recession that will last through the spring of 2024, while at the same time attacking policy actions by the Federal Reserve.
On Oct. 21, Musk exchanged tweets with Dogecoin co-creator Billy Markus, who uses the Twitter handle Shibetoshi Nakamoto (the name used by the presumed pseudonymous person or persons who developed Bitcoin).
Nakamoto stated in a tweet that current coronavirus numbers “are actually pretty low. 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 replied in a tweet.
The Tesla CEO is the latest corporate leader to express his concerns over the economy, such as Goldman Sachs CEO David Solomon, JPMorgan Chase CEO Jamie Dimon, and Amazon founder Jeff Bezos.
When Twitter user Tesla Owners Silicon Valley asked Musk about how long he thought the recession would last, he responded in a tweet, “Just guessing, but probably until spring of ‘24.”
Global gross domestic product (GDP) is expected to be at 3.2 percent this year, after growing grew 6 percent in 2021, according to a report from the International Monetary Fund.
However, the global economy is expected to decelerate even further, to 2.7 percent, in 2023. That figure would mark the weakest pace of growth since the first months in 2021 and the financial crisis in 2008–09.
Global Recession Predictions
U.S. GDP is projected to grow just 0.2 percent this year and 1.2 percent in 2023, reported the Federal Reserve, after a disappointing first half of 2022, which showed that the economy was in a technical recession.
JPMorgan Chase CEO Jamie Dimon warned that the world’s economies will face a recession in six to nine months, during an interview with CNBC on Oct. 10.
“These are very, very serious things which I think are likely to push the U.S. and the world—I mean, Europe is already in recession—and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said.
Dimon criticized the Fed for waiting “too long and did too little” as inflation jumped to a 40-year high, but he did credit the central bank for “clearly catching up.”
He said he could not predict how long a recession in the United States might last, but that investors should assess a wider range of outcomes instead.
“It can go from very mild to quite hard, and a lot will be reliant on what happens with this war in the Ukraine. So, I think to guess is hard, be prepared,” Dimon concluded.
Elsewhere, Musk also took the Fed to task for its aggressive interest rate-hike policy to combat inflation.
During Tesla’s third-quarter earnings call on Oct. 19, Musk slammed the central bank for looking at outdated data, predicting that Fed policymakers will eventually realize their mistake, reported Business Insider,
“The Fed is raising rates more than they should,” he commented, “but I think they’ll eventually realize that and bring it back down again.”
Musk noted that the rate hikes have contributed to a soaring dollar, which he blamed for Tesla’s poor quarterly sales and missed revenue estimates, which led to a rough week for the automaker’s stocks.
Another Fed critic, Kristina Hooper, chief global market strategist at Invesco, accused the central bank of playing a “dangerous game,” which may lead to a “significant recession,” and remarked that “75 is the new 25” [i.e., basis points], she said on her podcast on Bloomberg.
“When you are raising rates in 75 basis-point increments and you’re not giving any time for it to process through and make its way through into the data, you’re playing a dangerous game,” she said.
Hooper is concerned that the central bank will not stop raising rates until inflation is under control, even if causes disaster for the economy.
“And the more you’re doing it, the more likelihood you create of having a recession—and a significant recession.”
Meanwhile, Amazon founder and former CEO Jeff Bezos noted in a tweet that “the probabilities in this economy tell you to batten down the hatches,” in preparation for rough economic waters ahead.
He posted his tweet to a video of Goldman Sachs CEO David Solomon, during a CNBC interview, warning that there was a “good chance” that the U.S. economy would be in a recession.
Musk Sees Light at the End of the Tunnel
During a recent analyst call, Musk said that he still had confidence in the U.S. economy, but remained critical about the impact that the Fed’s hawkish policies were having on the economy, according to CNBC.
“The U.S. actually is in … North America’s in pretty good health,” he said, but reiterated that he believed the Fed would realize its overaggressive stance toward interest rates and change course.
When asked about the extent of the damage caused by a potential recession, Musk told shareholders that it was dependent on companies, according to CNBC.
He said that Tesla and SpaceX were in good positions, but that many other companies were not.
“Recessions do have a silver lining in that companies that shouldn’t exist stop existing,” Musk added.
Musk said that China is in “quite a burst of a recession of sort,” which was largely driven by its real estate market, while Europe “has a recession of sorts, driven by energy.”