Elon Musk is optimistic about inflation

The CEO of Tesla Elon Musk, at the customary shareholder meeting on Thursday, explained how he expects the CPI to have already peaked and that a recession, which will last 12 to 18 months, will be milder than expected

Like every year, Thursday was Tesla’s shareholder meeting chaired by the CEO himself, who didn’t miss delivering his own speech. Once he presented the quarterly report and outlined future plans, he spoke about the current economic situation in the United States in particular. 

The outlook on inflation levels and impending recession, according to Elon Musk

The outlook, according to the entrepreneur, is to be considered brighter than expected. Inflation is expected to have already peaked, and what we will be facing will be a less severe recession than expected, lasting between 12 and 18 months, and then giving way to a new period of economic growth.

At the assembly microphones, the CEO said:

“We get a good insight into where the prices of things are going over time. Inflation will drop rapidly”.

On Thursday, Tesla and SpaceX CEO Elon Musk explained his view on the US economy, inflation, and recession during Tesla‘s 2022 annual shareholder meeting:

“We get a lot of information about where the prices of things are going over time because when you make millions of cars, you have to buy goods many months ahead of when they are needed … Because it’s a long supply chain with a huge amount of inertia, so we have some sort of idea of ​​where prices are heading over time. The interesting thing we’re seeing now is that most of our commodities, most of the things that go into a Tesla – not all, but more than half – prices are falling in six months, six months from now”.

The CPI is turning downward, or at least that is the trend observed. GDP is also better than expected and the Fed itself is moving less heavily on rates. This picture reinforces the idea that the inflation peak has passed.

What to expect in the medium to long term

However, the CEO cautioned against predicting the future and still prefers a wiser attitude:

“Making macroeconomic predictions is a recipe for disaster, but my guess is that we have passed the inflation peak and that we will have a recession. I think it will be a relatively mild recession, but I am only guessing here”.

The hypothesis of a mild but persistent recession over time is certainly better than those feared so far by analysts, or rather by most of them, but the situation, he is keen to explain, is quite different from that of 2008, at least in America:

“We don’t have misallocations of capital in the US like we have in the past, like up until 2008 where we were building primary housing units at twice the rate of house formation, which obviously makes no sense. Many companies have been overburdened. The leverage or debt that companies have right now is relatively low, so I’d probably say, you know, a mild, moderate recession, maybe 18 months or so, and I think inflation will drop quickly. This is my hypothesis”.