Musk sees the US ‘probably’ in a recession that could last up to 18 months

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Musk sees the US 'probably' in a recession that could last up to 18 months

Elon Musk said the US economy was “probably” in a recession, a judgment inconsistent with available data and economists, and warned companies to watch costs and cash flows.

“These things happen and then there will be boom times again,” Musk said at the All-In Summit in Miami Beach, according to a live streamed video of his remarks posted by a Twitter user. “It will probably be a tough thing, I don’t know, a year, maybe 12-18 months.”

Recession fears have risen recently as the Federal Reserve tightens monetary policy to help cool inflation that is near its highest pace since the early 1980s. Still, the odds of a recession in the next year they are currently 30%, according to the latest monthly survey of economists from Bloomberg.

While the US economy shrank 1.4% annualized in the first quarter, the weakness was mainly due to a record trade deficit. Demand measures (consumer spending and business investment in equipment) actually accelerated in early 2022. The Federal Reserve Bank of Atlanta’s GDPNow estimate currently has second-quarter gross domestic product rising at a rate of 1 .8%.

Musk, CEO of Tesla Inc. and SpaceX, made the comments on the economy and politics as part of a wide-ranging video appearance at the tech conference. He is in the midst of a $44 billion takeover bid to buy Twitter Inc. and is pressing that social media company for more details about many of its so-called users who are actually bots.

Musk suggested that recessions are not necessarily a bad thing, adding that he has been through some of them in his time at public companies.

“What tends to happen is, if you have a boom that goes on too long, you get a misallocation of capital: It basically starts raining money on suckers,” he said.

Musk, when asked about recent comments on inflation made by billionaire Jeff Bezos, said that the rise in prices was simply due to printing money. Musk and Bezos are, respectively, the No. 1 and No. 2 richest people in the world, according to the Bloomberg Billionaires Index.

Musk said he is a moderate who has voted “overwhelmingly” with Democrats in the past, but is not a fan of US President Joe Biden’s administration. Earlier, he berated the Democratic president for downplaying Tesla’s role in the move toward electric vehicles.

“This administration just doesn’t seem to be doing much,” Musk said, adding that he thought immigration policy needed to be addressed. “It is incredibly important that the United States is the destination for the best talent in the world.”

While Musk said he’s “maybe never” voted for a Republican before, he said he might change his mind in the next election.

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