Musk sees the US ‘probably’ in recession for up to 18 months

Musk sees the US 'probably' in recession for up to 18 months

Bloomberg – Elon Musk said that the US economy was “probably” in a recession, a judgment that does not agree with economists and available data, 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’s probably going to be a tough thing, I don’t know, a year, maybe 12-18 months.”

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

While the US economy shrank 1.4% annualized in the first quarter, the weakness was mainly due to a record trade deficit. Demand measures (business consumer spending on equipment) actually accelerated in early 2022. Lhe Federal Reserve Bank of Atlanta’s GDPNow estimate currently has second-quarter Gross Domestic Product (GDP) rising at a 1.8% pace.

Musk, CEO of Tesla Inc. (TSLA) 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. (TWTR) 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, he said the price increase 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.

“The honest reason for inflation is that the government printed an amount of a billion more money than it had”, Musk said, adding that countries like Venezuela had already been down the same path. “This is not like, you know, super complicated.”

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. Previously, he called out the Democratic president for downplaying Tesla’s role in the move to 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.

-With assistance from Vince Golle


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