Topline
Billionaire Tesla and SpaceX CEO Elon Musk became the latest high-profile corporate bigwig to offer a dismal economic outlook amid high inflation and three rounds of interest rate hikes, doubling down on earlier predictions by tweeting Friday he expects a recession to last until the “spring of ‘24.”
Billionaire Elon Musk expects a recession to last until “spring of ’24,” making him the latest CEO … [+]
Key Facts
Musk’s economic outlook comes one week after he suggested a “recession of sorts” will hit China and Europe, slowing demand for Tesla’s electric cars, as the carmaker’s shares fall to $207.28, less than half of its peak of $413.29 last November.
Economists, corporate officials and bank leaders have been warning for months that the economy could be falling into recession as inflation hovers just over 8%, with Morgan Stanley CEO James Gorman and Citigroup CEO Jane Foster both offering grim economic outlooks earlier this month, and Bank of America CEO Brian Moynihan saying the major bank is already “baking in” a recession.
“Just guessing, but probably until spring of ‘24,” Musk tweeted when asked how long the recession will last.
When asked how bad he expects a recession could get, he responded that it “varies a lot,” adding his companies—electric vehicle maker Tesla and spacecraft manufacturer SpaceX—“are in good positions.”
He said the silver lining of a recession is that “companies that shouldn’t exist stop existing,” although he did not specify which companies he was referring to.
On Thursday, he informed investors of Twitter he plans to cut nearly three quarters of its workforce if he closes on a months-long $44 billion deal to buy the social media platform, according to the Washington Post—which would be the latest in a slew of major corporate layoffs this summer as employers fear rising inflation will tip the economy into recession.
Key Background
Musk is far from the first person to predict the economy will be tipped into recession, as the country struggles with soaring inflation and global supply shortages. Major bank heads have expressed concern in recent months that the Federal Reserve’s three rounds of interest rate hikes designed to curb accelerating inflation could also be undercutting economic growth by tempering demand too much. On Tuesday, Goldman Sachs CEO David Solomon told CNBC there’s a “good chance” the country heads into a recession, adding it would be a “really difficult economic scenario.” JPMorgan Chase CEO Jamie Dimon also said this week he believes it’s “likely” the country enters a worse-than-mild recession within the next six to nine months.
Big Number
8.2%. That’s how much consumer prices increased in the 12-month period ending in September, according to a Department of Labor report released last week, slowing down for the third straight month but still coming in 0.1 percentage points higher than economists had predicted. Although some prices, including gas, are falling, the price of products like food, rent and medical care continue to rise, with overall prices increasing 0.4% from August.
Forbes Valuation Number
We estimate Musk’s net worth at $209.4 billion, making the Tesla and SpaceX CEO the richest person in the world.
Further Reading
Goldman CEO Becomes Latest Bank Head With Gloomy Recession Prediction (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2022/10/21/musk-offers-dismal-recession-prediction-probably-until-spring-2024/